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Manufacturing Grows But There are Concerns Says ISM

Manufacturing Grows But There are Concerns Says ISM

Dec. 1, 2021
“Business is strong but meeting customer demand is difficult due to a shortage of raw materials and labor.”

Manufacturing growth accelerated slightly in November to make up for a slight slowdown in October as the sector continues to deal with the same issues of labor and commodity availability. The Institute for Supply Management upgraded its manufacturing growth index by 0.3 points to 61.1%, but noted continued complaints about the difficulty of meeting demand.

Thanks to strong and persistent demand for manufacturing products, manufacturers surveyed by the ISM are increasingly optimistic, according to Timothy Fiore, chair of the ISM’s manufacturing survey committee. In an analysis of survey comments, Fiore noted that respondents gave 10 positive comments on manufacturing growth to each negative remark. Last month, the ratio of positive-to-negative comments was 4:1.

One comment, from an executive in the furniture products industry, could have come from almost any time in the last year: “Business is strong but meeting customer demand is difficult due to a shortage of raw materials and labor.” A machinery executive worried that “off the charts” sales seen in the first nine months were flattening out.

Increasing Prices

Another executive anticipated supply prices reaching stability but continued hiring hurdles: “While steel plate and hot-rolled coil pricing seems to be approaching a plateau, the biggest challenge we have at the moment is finding qualified workers,” the executive wrote.

Steel and its varieties are among some of many commodities noted by the ISM as up in price and in short supply for over a year now. Most dramatically, hot rolled steel has been up in price every month for 15 months, and steel itself has been in short supply for 12

.Despite those complaints, the manufacturing sector improved across the board in November as orders continued to rise, production sped up, hiring increased. The ISM’s new orders index rose 1.7 points to 61.5%, the production index rose 2.2 points to 61.5%, and the employment gauge rose 1.3 points to 53.3%, indicating that all three continued to increase at a faster rate.

Even the long-sluggish supplier-deliveries index improved slightly. The supplier-deliveries index fell 3.4 points to 72.2%, indicating that they are continuing to slow, but at a lower rate than before. Supplier deliveries have gotten slower every month for 69 months running, according to the ISM.

The manufacturing PMI, new orders and production indexes have now each increased each month for a year and a half now as the overall economy by the ISM’s reckoning has continued to grow for 18 months straight.

More Jobs Created

Elsewhere, ADP, a private payroll services company, predicted that U.S. manufacturing added 50,000 jobs in November. That’s about level with its October report, when the ADP said 53,000 jobs were created. The Department of Labor, which will release its own job figures for November on December 3, said last month that the manufacturing sector hired 60,000 people in October.

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