Economic activity in the manufacturing sector grew in January, with the overall economy notching an eighth consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
“Labor market difficulties at panelists’ companies and their suppliers will continue to restrict the manufacturing economy expansion until the coronavirus (COVID-19) crisis abates,” says Timothy R. Fiore,
of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee
The January Manufacturing PMI registered 58.7%, down 1.8 percentage points from the seasonally adjusted December reading of 60.5%.
Report highlights include:
- The New Orders Index registered 61.1%, down 6.4 percentage points from December reading of 67.5%.
- The Production Index registered 60.7%, a decrease of 4 percentage points compared to December reading of 64.7%.
- The Backlog of Orders Index registered 59.7%, 0.6 percentage point above the December reading of 59.1%.
- The Employment Index registered 52.6%, 0.9 percentage point higher from the December reading of 51.7%.
- The Supplier Deliveries Index registered 68.2%, up 0.5 percentage point from the December figure of 67.7%.
- The Inventories Index registered 50.8%, 0.2 percentage point lower than the December reading of 51%.
- The Prices Index registered 82.1%, up 4.5 percentage points compared to the December reading of 77.6%.
- The New Export Orders Index registered 54.9% a decrease of 2.6 percentage points compared to the December reading of 57.5%.
- The Imports Index registered 56.8%, a 2.2-percentage point increase from the December reading of 54.6%.
Fiore continues, “The manufacturing economy continued its recovery in January. Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential. However, panel sentiment remains optimistic (three positive comments for every cautious comment), similar to December levels.”
Of the six biggest manufacturing industries, five — Chemical Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products — registered moderate to strong growth in January. Petroleum & Coal Products contracted.
What Respondents are Saying
- “Supplier factory capacity is well utilized. Increased demand, labor constraints and upstream supply delays are pushing lead times. This is more prevalent with international than U.S.-based suppliers.” (Computer & Electronic Products)
- “Business remains strong. Manufacturing running at full capacity.” (Chemical Products)
- “Very strong demand with limitations in supply to meet increased demand.” (Transportation Equipment)
- “Labor continues to be one of our largest challenges.” (Food, Beverage & Tobacco Products)
- “Our current business demand is going way past pre-COVID-19 [levels].” (Fabricated Metal Products)
- “Business is very good. Customer inventories are low, with a significant order backlog through April. Supply base is struggling to keep up with demand, disrupting our production here and there. Raw material lead times have been extended. COVID-19 continues to cause challenges throughout the supply chain. Huge logistics challenges, especially in getting product through ports and in getting containers. We are seeing significant cost increases in logistics and raw materials.” (Machinery)
- “We have had an increase in employees testing positive for COVID-19, negatively impacting manufacturing.” (Miscellaneous Manufacturing)
- “2020 growth at 5% during a very challenging and volatile year. 2021 is expected to bring growth at a 7% or even greater pace. Logistics is the critical concern, but we are currently abating risk.” (Electrical Equipment, Appliances & Components)
- “January 2021 started with strong orders for plastic components in auto, electrical and other sectors. The industry outlook is optimistic. Looking at investing in new equipment for anticipated demand later this year. Reshoring is taking hold, with new customer potential.” (Plastics & Rubber Products)
- “Business is improving, but we are still struggling with a shortage of available labor.” (Primary Metals)
