US Manufacturing Sector Sees Robust Growth Despite Supply Chain Bottlenecks

The US manufacturing sector saw robust growth in October despite continued supply chain bottlenecks, the Institute for Supply Management (ISM) has reported

The Purchasing Managers' Index (PMI) stood at 60.8 per cent, down 0.3 percentage point from the September reading. Any reading above 50 per cent indicates the manufacturing sector is generally expanding.

Persistent Supply Issues

"October's ISM manufacturing report demonstrates that activity remains strong despite persistent supply issues," Tim Quinlan and Shannon Seery, Economists at Wells Fargo Securities, wrote in an analysis, adding that purchasing managers across industries continue to cite strong demand, Xinhua news agency reported.

US factory
US factory Wikimedia Commons

They noted that the largest gains came from two components that "continue to be at the center" of supply issues: prices paid and supplier deliveries.

According to the ISM, the Prices Index registered 85.7 per cent, up 4.5 percentage points compared to the September figure, while the Supplier Deliveries Index registered 75.6 per cent, up 2.2 percentage points from the September figure.

The Backlog of Orders Index registered 63.6 per cent, 1.2 percentage points lower than the September reading, indicating persistent supply-chain constraints, the report showed. The Employment Index registered 52 per cent, 1.8 percentage points higher compared to the September reading.

Increasing Demand

"Business Survey Committee panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand," said Timothy Fiore, Chair of the ISM's manufacturing business survey committee.

"All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products," Fiore added.

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He said global pandemic-related issues -- worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems -- "continue to limit manufacturing growth potential".

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