Photo credit: Tinker Air Force Base
Activity in the U.S. manufacturing sector accelerated in November, reaching its eighteenth straight month of expansion, according to the Institute of Supply Management’s survey of supply executives released December 1st. Meanwhile, optimism was on the rise as supply chain disruptions and related high prices appeared to ease.
The ISM reports its index of manufacturing activity rose 0.3% in November to a reading of 61.1%. Any reading over 50 indicates expansion.
Demand spiked in November as the ISM’s New Orders index rose 1.6% to a level of 61.5. Production rose even faster, up 2.2% to 61.5%. Employment and exports also rose considerably, while supplier deliveries continued to slow and customer inventories fell 6.6% to a level of 25.
Meanwhile, prices rose at a slower rate compared to October, falling 3.3% to a reading of 82.4%. For the first time in months, the ISM listed commodities that actually came down in price, including aluminum, plastic resins, polypropylene, and hot-rolled steel.
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Timothy Fiore, Chair of the ISM committee stated the sector “remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement.” Fiore referred to multiple issues faced by manufacturing companies including “record-long lead times and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices and difficulties transporting products.”
Optimism among manufacturing executives continued this month, improving over October. The ISM registered 10 positive comments for every one negative, compared to last month’s 4 positive comments for every one negative comment.
In November, thirteen of eighteen industries reported growth, strongest in apparel, leather & allied products; furniture & related products; electrical equipment, appliances & components; and machinery.
What Manufacturers Are Saying About Business Conditions
Comments from the ISM panel reflected the myriad challenges found in the current manufacturing climate, but also suggested some improvement in supply chain disruptions, high prices and overall business conditions.
“Petrochemical supply chain is slowly showing signs of improvement after multiple weather disruptions in 2021” said one executive in the chemical products sector.
“We are starting to catch a break in plastic resins, with (November) prices lower in both ethylene and propylene-based resins. Starting to notice improvement in availability/lead time as well,” said another in the plastics and rubber products sector.
Others point to continued difficulties with labor shortages. “Business is strong but meeting customer demand is difficult due to a shortage of raw materials and labor,” said one respondent in the furniture sector.
"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,” said another in the fabricated metals sector.
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