Uncertainties will stymie US manufacturing investment

Significance

The White House claimed that President Donald Trump's policies are responsible for the investment decision by the manufacturer. A pick-up in new orders, higher purchasing levels and an increase in hiring activity all point to stronger growth in US manufacturing output in the second half of 2017. However, depressed profit margins are limiting new investments in productivity-enhancing assets.

Impacts

• Canadian and Mexican outreach to Republican governors will prove an effective pro-NAFTA strategy.
• Rising cost pressures will keep manufacturers focused on efficiency improvements and cost reduction at the expense of innovation.
• The US border adjustment tax scheme mulled last year appears to have little chance of passing the Senate.