The Institute for Supply Management’s monthly report on conditions in the manufacturing field shows that optimism is growing among manufacturers as conditions for growth remained, despite persistent and ongoing supply chain issues across the board. The ISM’s PMI for February rose by 1 point to 58.6%. If the manufacturing sector continues to grow for three more months, it will mark two full years of solid growth for U.S. manufacturing.
The ISM’s new orders index rose 3.8 points to 61.7%, indicating growth at an even higher rate. The production index grew less than a full point to 58.5%, maintaining previous growth.
The employment index, though, fell by 1.6 points to 52.9%, indicating continued growth at a slower rate. Of those three indexes, the employment index is the one that has had the rockiest growth over the last two years: it has now been growing for six months, while the other two have maintained growth for 21 months each.
Timothy Fiore, chair of the ISM’s manufacturing survey committee, reported that comments received in the February survey were more optimistic than in previous months. Responses to the February survey included a ratio of 12 positive comments to each cautious one, up from January’s 7:1 and December’s 6:1 positive-to-negative ratios. According to Fiore, the omicron variant of COVID-19 remained a concern for manufacturers despite expected relief in March.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” Fiore said.
Survey comments hit the same beats as previous months: Companies are trying to meet the opportunity of high demand despite adverse supply conditions. An executive from the computer and electronic products sector wrote simply that the “electronic supply chain is still a mess.”
Executives of chemicals, transportation equipment, food and beverage, and electrical equipment all noted strong demand. “We are expecting a year of strong demand, higher prices and continued supply chain challenges,” wrote a textile mill leader.
The supply chain issues continued to affect the ISM’s list of hard-to-get or expensive commodities. The price of aluminum remained elevated for a twenty-first month straight, while twelve other commodities including electronic and electrical components, semiconductors, and various kinds of steel also remained up in price for over a year. All of the above commodities were also recorded by the ISM as “in short supply.”
