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Factories Still Struggling with Material & Labor Supply Says ISM

Factories Still Struggling with Material & Labor Supply Says ISM

Feb. 1, 2022
Many goods and commodities remained up in price and in short supply in January.

Conditions in the manufacturing sector have slowly improved over the last three months, but many of the sector’s persistent issues remain. That’s according to the latest survey on manufacturing conditions conducted by the Institute for Supply Management. In the February 1 report, the ISM dropped its overall manufacturing index by 1.2 points to 57.6% for January 2022, indicating slightly slower growth than in December.

The culprits of 2022’s sluggish growth are the same as those blamed in 2021 so far: A lack of available talent and a badly tangled supply chain. But conditions are improving, according to Timothy Fiore, chair of the ISM’s manufacturing survey committee.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, but January was the third straight month with indications of improvements in labor resources and supplier delivery performance,” said Fiore in the report. Fiore also noted that respondents to the survey were slightly more confident than they were in December. The survey recorded a ratio of seven optimistic comments to each negative one.

Respondents quoted in the report were almost all concerned with the dearth of workers, supplies, or both. A computers and electronics executive noted “some improvement in materials making it to our factories and logistics centers,” but their company is “still constrained by a lack of qualified labor.”

A respondent from the transportation equipment industry wryly noted that the difficulties facing companies today don’t discriminate: “Transportation, labor and inflation issues continue to hamper our supply chain and ability to service our customers. Fortunately, it’s also hampering our competition as well,” they said. The biggest impact won’t be on businesses, that respondent predicted, but customers who will see higher prices.

In a sign that labor shortage may be slowly improving, the ISM’s Employment index rose by about half a point to 54.5%, indicating slightly faster growth in January. And on the supplies side, the Supplier Deliveries index fell by about a third of a point, indicating that deliveries are still getting slower, but at a slower rate. The ISM’s numbers indicate Sup

Many goods and commodities remained up in price and in short supply in January, according to the ISM’s report, including aluminum and aluminum products, electrical and electronic components, semiconductors, and steel products.

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