Manufacturers’ optimism declines amid rising inflation: report

Monica Ferguson   

Economy Industry Operations Manufacturing decline in optimism economic trends material cost rising inflation Sikich Industry Pulse supply chain

The latest Sikich Industry Pulse: Manufacturing and Distribution found that 58 per cent of manufacturers rated their optimism about business prospects over the next six months at a seven or higher on a scale of one to 10. At the same time last year, more than 80 per cent of manufacturers rated their optimism at a seven or higher. And just three months ago, nearly 70 per cent of manufacturers rated their optimism at a seven or higher.

When asked what factors have contributed to the decline in optimism, nearly one quarter of manufacturers cited inflation and economic decline. The report found that 100 per cent of respondents said they have experienced an increase in material cost in the last 12 months, and all but 1 per cent made the decision to pass price increases on to customers.

Demand has increased for two-thirds of manufacturers, and companies are struggling to keep up. Half of companies with revenue under $100 million reported being unable to keep up with their current demand, and 70 per cent of respondents from companies with more than $100 million in revenue said they are unable to keep up with demand. More than 40 per cent of manufacturers cited supply chain challenges as the reason they cannot meet demand, while 39 per cent cited employee shortages.


“Given current economic trends, it’s understandable that manufacturers’ optimism is declining,” said Jerry Murphy, partner-in-charge of manufacturing and distribution services, Sikich. “Yet, increased demand offers some promising news. To keep up, business leaders should diversify their material suppliers and challenge logistics providers to find ways to tighten delivery times. And, to address employee shortages, companies must revisit their talent strategies and implement comprehensive recruitment and talent development programs.”

Talent acquisition was the third-most common reason manufacturers cited for their decreased optimism. Further, nearly 40 per cent of survey respondents reported employee shortages a factor contributing to challenges meeting demand.


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