New NAM Survey: Rising Input Costs Again Top Manufacturers’ Concerns

Manufacturers expect costs to continue rising, with raw material and other input costs projected to increase 5.0% over the next year as the conflict in the Middle East and ongoing trade uncertainties continue to pressure supply chains, according to the NAM’s Q3 Manufacturers’ Outlook Survey (conducted in mid-August).

• Increased raw material costs remained manufacturers’ top business challenge for the second consecutive quarter, with rising healthcare costs and trade uncertainties rounding out the top three.

Global conditions: Among manufacturers surveyed about the conflict in the Middle East, 60.6% of respondents said that conditions related to the conflict have not improved from the prior quarter, while 33.2% said challenges have worsened.

Transportation: Transportation costs are also straining supply chains with 77.3% of manufacturers citing freight rates and 74.1% citing fuel costs as challenges. Nearly all respondents (98.6%) rely on trucks to move goods.

Overall optimism: Manufacturers’ optimism continues to rise, with 78.9% of respondents reporting a somewhat or very positive outlook for their company, driven in part by expectations for stronger sales.

• Respondents project sales, production, capital investments and exports to grow at the fastest rate in more than four years over the next 12 months.
• “Strong demand is fueling a notable increase in anticipated sales and production growth, both projected to rise 4.3% and 3.8%, respectively, the highest growth rates for both indexes since Q2 2022,” said NAM Chief Economist Victoria Bloom. “Because of a strengthening sales forecast, manufacturers remain optimistic, though growth in the industry would likely be stronger if cost pressures eased.”

Imports: Nearly two-thirds (63.0%) of manufacturers plan to import industrial machinery (including parts and components) in the next year to support existing or planned manufacturing operations.

• Of those, 69.2% plan to use the machinery to upgrade or replace existing machinery, while 63.6% mentioned plans to use the machinery for new or expanded operations.
• These findings show why policymakers must help manufacturers secure industrial machinery, including through policies like the NAM’s U.S. Manufacturing Investment Accelerator Program, which would give manufacturers access to the equipment they need to invest and grow.

The bottom line: “Manufacturers are seeing encouraging signs for growth, but they are also facing some strong headwinds such as rising costs and global uncertainty that continue to place pressure on global supply chains,” said NAM President and CEO Jay Timmons. “Building on the 2025 tax legislation, along with the continued regulatory certainty and energy dominance policies we’re seeing, it’s critical that we keep locking in pro-growth policies here at home.”

• “Policymakers can help manufacturers invest in confidence by acting on surface transportation reauthorization, permitting reform, rising healthcare costs and trade certainty, including the NAM’s U.S. Manufacturing Investment Accelerator Program.”