Last updateFri, 16 Apr 2021 5pm

Manufacturing Production Rebounded in March

In March, total industrial production increased 1.4%. The gain in March followed a drop of 2.6% in February, which largely resulted from widespread outages related to severe winter weather in the south central region of the country. For the first quarter as a whole, total industrial production rose 2.5% at an annual rate.

Manufacturing output increased 2.7% in March, following a decline of 3.7% in February. For the first quarter, factory output advanced 1.9% at an annual rate. In March, the index for durable manufacturing increased 3.0%. All major categories of durables registered increases, most of which were between 2% and 3%. 

NAM Warns Tax Increases Would Cost a Million Jobs

According to a new study conducted by Rice University economists for the National Manufacturers Association, corporate tax hikes and other tax reform rollbacks under consideration could result in a loss of 1 million fewer jobs in the first two years.

Economists John W. Diamond and George R. Zodrow calculated the effects of raising the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions and more. The projected impact of these changes includes:

  • 1 million jobs lost in the first two years
  • By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031
  • Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively

NAM: Manufacturers’ Optimism Continues to Increase

In the NAM’s first-quarter 2021 Manufacturers’ Outlook Survey, manufacturers reported an increase in optimism for the third straight quarter. The survey found that 87.6% of manufacturers felt either somewhat or very positive about their company’s outlook. The number bounced back from the 33.9% reading in the second quarter of 2020, which was the worst since the Great Recession. More importantly, this suggests that manufacturers had the strongest outlook in two years, since the first quarter of 2019.

After plummeting sharply last year due to the COVID-19 pandemic and the global recession, manufacturing activity has rebounded sharply, with the sector being a bright spot in the economy in recent months. Manufacturing production is likely to exceed pre-pandemic levels in the next couple months, and employment in the sector has risen in all but one month since April 2020. But despite solid growth, the industry still faces supply chain challenges, and companies continue to note workforce challenges. 

NAM Reacts to Biden's $2 Trillion Infrastructure Plan

National Association of Manufacturers (NAM) President and CEO Jay Timmons released a statement on President Joe Biden’s infrastructure framework.

“The President’s proposal for historic levels of infrastructure investment reflects many of the investment priorities in the NAM’s ‘Building to Win’ plan, and we look forward to reviewing the details. President Biden’s clear focus on strengthening manufacturing and the workforce of the future shows that he is truly committed to building the next post-pandemic world—one that is stronger and more resilient than in pre-pandemic times,” said Timmons.

“One thing is clear for our industry, though. Raising taxes on manufacturers would fundamentally undermine our ability to lead this recovery. Our industry fought for decades to achieve a tax system that includes competitive rates and modern international tax provisions.” 

Texas Manufacturing Activity Accelerates Sharply

Texas factory activity expanded at a markedly faster pace in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, surged 28 points to 48.0, its highest reading in the survey’s 17-year history. Perceptions of broader business conditions improved markedly in March.

Other measures of manufacturing activity also pointed to sharply faster growth this month. The new orders index rose 18 points to 30.5, and the growth rate of orders index rose 11 points to 22.7. The capacity utilization index rocketed from 16.5 to 46.1, an all-time high. The shipments index rose 17 points to 33.1. 

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