This article discusses how the US manufacturing sector is expected to see job cuts due to a decrease in backlogged orders and softer demand for manufactured goods. As supply chains have improved and backlogs have dwindled, manufacturers may begin to consider reducing their workforce once demand remains subdued. The Wells Fargo economists’ analysis suggests that unfilled orders of core capital goods adjusted for inflation, or backlogs, are expected to return to pre-pandemic levels within the next five months. While manufacturing layoffs are expected, companies may hesitate to shed workers due to previous difficulty in attracting and retaining talent.
In our conversations in the Marketplace, we agree – each company’s particular outlook is varied based on industry and market specifics. Some are very bullish, others pessimistic. So much unknown as well – debt ceiling crisis resolution, inflation relief, interest rates.
What is your outlook?? Will your organization be faced with layoff decisions this year or growth? (Of course – we agree profoundly – in light of the struggles many Manufacturing organizations have faced to attract and retain talent in the post-COVID era, there are not easy decisions at all!)
We’d love to hear from you!!!
Layoffs loom in the US manufacturing sector as backlogs shrink
US manufacturers have now mostly worked their way through their backlogged orders — and that means job cuts could be on the horizon as soon as this year.
Those orders, which accumulated because of supply chain disruptions in the early days of the pandemic, have helped keep the manufacturing industry mostly insulated from the mass layoffs seen in other sectors, like technology and finance.
Supply chains, which clogged up during the pandemic and were choked off again after Russia’s invasion of Ukraine, have improved considerably in the past year, and manufacturing backlogs are dwindling fast. Meanwhile, demand for manufactured goods has fallen in recent months as consumers and businesses pulled back on purchases in favor of experiences such as travel and dining out.
An analysis by Wells Fargo economists provided to CNN shows that unfilled orders of core capital goods adjusted for inflation, or backlogs, are expected to return to pre-pandemic levels within the next five months. And surveys from the Institute for Supply Management show that the manufacturing sector has been contracting for several months, while fewer manufacturers report an increase in backlogs.