The chief economist for the National Association of Manufacturers gave a cautious outlook on national manufacturing trends at the Wisconsin Manufacturers & Commerce State of Wisconsin Business luncheon.
At the Madison luncheon yesterday, Chad Moutray painted a picture of a country recovering from a slow year, saying that “manufacturers are very cautious right now.”
Kurt Bauer, president and CEO of WMC, described manufacturing as “the driver of Wisconsin’s economy,” saying that “overall, we’re in good shape.”
Moutray’s analysis focused on the various sectors that add or detract from productivity levels.
“Sectors that have been challenged are export-heavy,” said Moutray. “Overall, consumer spending is a bright spot.”
He said that while investments in food, motor vehicles and chemicals are up, hiring and inventory spending has been a drag for most of the past year.
“Manufacturing is a pretty mixed sector,” said Moutray. “There are pockets of strength.”
Moutray pointed out that “year-over-year manufacturing in September is unchanged, as growth is at zero percent,” but acknowledged that “we’re certainly not in the negative.”
Moutray also pointed to a NAM survey showing 61 percent of members are positive about the future of their business.
“Confident businesses invest and grow,” said Bauer, pointing out that on the state level, “we’ve got a workforce shortage. It’s getting worse faster than demographers told us it would.”
Bauer emphasized the necessity of drawing workers to the state to satisfy this need.
“Come North my friends, come North,” he said in an appeal to Illinois residents.
To the same end, Gov. Scott Walker talked about engaging students in the workforce early.
“We want to help our young people as early as middle school to start thinking about what they’re good at,” said Walker. “We want to set out a career path for every child, not just for those who want to excel or go to a certain region, but for every one of our students.”
Moutray pointed to many different factors in his economic analysis, highlighting uncertainty as one of the main things causing business leaders to hold back from investment and growth.
“The drag on the last three quarters is partially consumers being nervous, but mostly comes from the business side,” said Moutray. “Businesses weren’t spending as much on inventory.”
Several internal and external factors were highlighted by Moutray as opportunities.
China, he said, is “no longer the threat to global manufacturing” that it was earlier this year. He also said that the British pound has weakened to its lowest point since 1985.
Moutray stated the predicted GDP growth for this year is 1.6 percent, slightly less than last year.
This growth has been held back, he said, by “very sluggish growth” in labor productivity. He says that to improve that, it’s necessary to get manufacturing rates up first, as increased labor productivity will follow.
Walker pointed out that despite the state’s shortcomings, “in 2016 there are more employed in Wisconsin than ever in the history of the state.”
“Manufacturing and business overall is alive and well in Wisconsin,” said Walker. “You name it; we’re making it happen.”
–By Alex Moe,