Sentiment among manufacturers generally stabilized in the third quarter, but the divergent outlooks of small and large companies portray a disjointed industry, according to the latest National Association of Manufacturers Outlook survey.
The overall Manufacturing Outlook Index for the quarter was 41.8, down from 42.3 the previous quarter, and the fifth consecutive quarter when positive responses about the outlook were below the historic average of 73 percent.
For the third quarter, 61 percent of manufacturers are either somewhat or very positive about their own company’s outlook, down from 61.7 percent last quarter. And while the third quarter was above the fourth quarter of 2015 and first quarter of 2016, the disparity between large and small manufacturers underscored the problems still facing the industry.
"Large manufacturers (i.e., those with 500 or more employees) were more upbeat about their company’s outlook this quarter, but small (i.e., those with fewer than 50 employees) and medium-sized manufacturers (i.e., those with between 50 and 499 employees) experienced declines in their outlook in this survey," according to NAM.
Small firms anticipated sales growth of 1.3 percent over the next 12 months, with their medium-sized and larger counterparts averaging 2.1 percent growth expectations. For production, the difference was 1.6 percent for small manufacturers versus 2.2 percent for medium-sized and larger companies.
For all firms, sales and production are expected to grow by 1.9 percent and 2.1 percent over the next 12 months, respectively, up from 1.6 percent and 1.5 percent. The percentage of respondents expecting sales declines dropped to 16.2 percent from 23 percent last quarter.
The industry expects to face a wide range of challenges, including concerns over rising health care costs and diminishing perceived growth rates over the next 12 months. This was especially the case for the smallest of firms, with just 48.7 percent positive in their outlook in this survey, down from 56.1 percent last time.
Survey respondents said challenges range from "election-year jitters" to "government bureaucracy" to "housing market weakness" to "business is just flat."
