Manufacturers said they expect costs to rise over the next year as the Iran War continues, a new report from the National Association of Manufacturers found.
The NAM’s Q3 Manufacturers’ Outlook Survey found that manufacturers believe raw material costs, rising healthcare costs and trade uncertainties top their list of challenges in the coming year. Raw material and other input costs are projected to increase 5 percent over the next year as the conflict in the Middle East continues.
Among manufacturers surveyed about the Middle East conflict, 60.6 percent said the conditions related to the conflict have not improved while 33.2 percent said the challenges have worsened.
However, manufacturers said they continue to be optimistic about the future. Nearly 80 percent (78.9 percent) said they have a somewhat or very positive outlook for their company, driven by expectations for stronger sales. Respondents said they believe sales, production, capital investments and exports will grow 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,” NAM Chief Economist Victoria Bloom said. “Because of a strengthening sales forecast, manufacturers remain optimistic, though growth in the industry would likely be stronger if cost pressures eased.”
Respondents also reported that transportation costs are straining supply chains, as more than three quarters (77.3 percent) cited freight rates as a challenge, while 74.1 percent cited rising fuel costs. Nearly all of the respondents (98.6 percent) rely on trucks to move goods.
“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,” NAM President and CEO Jay Timmons said. “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.”