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    Economy Continues 22 Month of Growth: ISM
    1. Global Supply Chain

    Economy Continues 22 Months of Growth: ISM

    April 1, 2022
    "In March, progress was made to solve the labor shortage problems at all tiers of the supply chain, which will result in improved factory throughput and supplier deliveries," ISM said.

    ISM reported that expansion in the overall economy for the 22nd month in a row after a contraction in April and May 2020.

    However, the  March Manufacturing PMI dipped a bit registering 57.1%, a decrease of 1.5 percentage points from the February reading of 58.6%.

    "The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment," said Timothy R. Fiore, in a statement. "In March, progress was made to solve the labor shortage problems at all tiers of the supply chain, which will result in improved factory throughput and supplier deliveries. Panelists reported lower rates of quits and early retirements compared to previous months, as well as improving internal and supplier labor positions. March brought back increasing rates of price expansion, due primarily to instability in global energy markets. Suppliers are not waiting to experience the full impacts of price increases before negotiating with their customers."

    Index Reports

    As far as specific indexes, the report includes the following:

    • The New Orders Index registered 53.8%, down 7.9 percentage points compared to the February reading of 61.7%.
    • The Production Index reading of 54.5% is a 4-percentage point decrease compared to February's figure of 58.5%.
    • The Prices Index registered 87.1%, up 11.5 percentage points compared to the February figure of 75.6%.
    • The Backlog of Orders Index registered 60%, 5 percentage points lower than the February reading of 65%.
    • The Employment Index figure of 56.3 percent is 3.4 percentage points higher than the 52.9% recorded in February.
    • The Supplier Deliveries Index registered 65.4%, a decrease of 0.7 percentage points compared to the February figure of 66.1%.
    • The Inventories Index registered 55.5%, 1.9 percentage points higher than the February reading of 53.6%.
    • The New Export Orders Index reading of 53.2%t is down 3.9 percentage points compared to February's figure of 57.1%.
    • The Imports Index registered 51.8%, a 3.6-percentage point decrease from the February reading of 55.4%."

    What Respondents are Saying

    • "No letup yet in supply chain challenges, especially electronic components. Relying more and more on the broker market." [Computer & Electronic Products]
    • "Customer orders are brisk in the face of significant price increases, while we continue to struggle with inbound supplier service and raw material availability issues." [Chemical Products]
    • "Generally speaking, the business environment is slowly improving for aerospace component manufacturers. Supply chain disruptions and still-extending lead times continue to keep purchasing busy. This further causes reevaluation of the current year's business plan and cost assumptions." [Transportation Equipment]
    • "Overall business conditions are challenging in both domestic and international transportation. The Russian invasion of Ukraine has created uncertainty in the grain markets, causing upward pricing pressure. In addition, inflationary pressures across all categories have made it challenging to manage cost and profitability." [Food, Beverage & Tobacco Products]
    • "Prices are increasing on steel and steel products after a slight decrease from highs last month. Transportation costs are going up significantly with the increase in fuel prices." [Machinery]
    • "Backlog continues to be strong as we ship delinquent orders resulting from COVID-19 slowdowns." [Fabricated Metal Products]
    • "Demand continues to be strong. Backlog is still increasing — currently at about three months of production. Availability of purchased material continues to constrain production, causing the increased backlog." [Electrical Equipment, Appliances & Components]
    • "Business continues to be strong, with incoming sales higher but still combating labor and material issues like availability and inflation. Still determining impact of the Russian invasion of Ukraine." [Furniture & Related Products]
    • "The supply situation is getting worse, with lead times extending over 12 months, material not available, and suppliers not quoting or taking orders. Prices on the rise daily." [Miscellaneous Manufacturing]
    • "Supply chain is still unstable. While we have seen improvements, there are still a lot of issues that have yet to be resolved." [Primary Metals]