High inflation and rising risks of recession are darkening the mood in the manufacturing industry.
Fifty-nine percent of industry leaders say inflationary pressures are making a recession more likely next year, according to a survey released Wednesday by the National Association of Manufacturers.
Three-quarters of manufacturers say inflationary pressures are worse today than they were six months ago, with 54% also saying higher prices are hampering competition and profitability.
The survey was conducted May 17-31, ahead of the alarming May inflation report that triggered severe turmoil in financial markets.
“Throughout a number of downturns, manufacturers have shown themselves to be remarkably resilient, but there is no doubt that there are darker clouds on the horizon,” Jay Timmons, CEO of the manufacturing trade group, said in a statement.
The top business challenge reported by manufacturing CEOs in the survey was rising raw material costs, cited by 90% of respondents. The main sources of inflation were rising raw material prices (97%), freight and transport costs (84%), wages and salaries (80%), energy costs (56%) and shortages of workers (49 %).
“Russia’s war against Ukraine has undeniably exacerbated higher energy and food costs,” Timmons said, adding that deficit spending by the federal government contributed to high inflation. Timmons did not mention the Federal Reserve’s belated departure from emergency policy.
The Association urged lawmakers to refrain from imposing new taxes and focus on easing supply pressures, including passing the Bipartisan Innovation Act championed by the White House. Timmons said 88% of manufacturers in the survey see this as an important piece of legislation.
“While it won’t solve every problem, it will give us many of the tools we need to grow domestic manufacturing and strengthen our supply chains,” Timmons said. “Congress needs to act quickly to get it to President Biden’s table.”
Source: CNN Brasil
