The NAM Manufacturing Outlook Index dropped five points to 40.5, the lowest level since the end of 2012, according to the National Association of Manufacturers' fourth quarter Manufacturers’ Outlook Survey.
Manufacturers continue to cite an unfavorable business climate as their top business challenge and their expectations for sales and output for 2016 are modest. More than half still believe that the U.S. Federal Reserve should refrain from raising interest rates until 2016.
About 58 percent of respondents reported the recent slowdown in global growth negatively impacted their company’s international sales or exports. Meanwhile, 16.9 percent said it has no impact, and only 4.4 percent reported improved export sales in the past 12 months.
"Manufacturers have wrestled with economic headwinds for much of the year," said NAM Chief Economist Chad Moutray. "The stronger dollar, economic weaknesses in key export markets and reduced commodity prices have all played a role in holding manufacturing back year-to-date. Anxieties about the business climate contributed to manufacturers’ willingness to add new workers or make capital investments. This apprehension is reflected in the latest jobs numbers, which showed manufacturing employment continued to fall. The diminished outlook in the sector continues to illustrate the need for pro-growth policies, particularly those that help to make firms more globally competitive. These include tax policies that encourage more investment while also leveling the playing field with international peers."
