Economic activity in the U.S. manufacturing sector grew in November, with the overall economy achieving an 18th consecutive month of growth, the nation’s supply executives said in the latest Manufacturing Institute for Supply Management (ISM) “Report on Business.”
The 13 manufacturing industries reporting growth in November were led by apparel, leather and allied products, and furniture and related products.
“The November Manufacturing PMI (Purchasing Managers Index) registered 61.1 percent, an increase of 0.3 percentage point from the October reading of 60.8 percent,” Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, said.
A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A Manufacturing PMI above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement,” Fiore said. “All segments of the manufacturing economy are impacted by record-long raw materials and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products. Coronavirus pandemic-related global 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.”
Related Stories
He said panel sentiment remains strongly optimistic, however, with 10 positive growth comments for every cautious comment. Panelists remain focused on the importance of improving supply chain issues to respond to ongoing high levels of demand.”
ISM’s New Orders Index registered 61.5 percent in November, an increase of 1.7 percent compared to October. This indicates that new orders grew for the 18th consecutive month.
A New Orders Index above 52.8 percent is generally consistent with an increase in the Census Bureau’s series on manufacturing orders. Ten of 18 manufacturing industries reported growth in new orders in November, topped by apparel, leather and allied products.
The Production Index registered 61.5 percent in November, 2.2 percent higher than October, and also indicating growth for the 18th consecutive month. An index above 52.1 percent generally coincides with an increase in the Federal Reserve Board’s Industrial Production figures.
The 11 industries reporting growth in production during the month of November included textile mills, and furniture and related products.
ISM’s Employment Index registered 53.3 percent in November, 1.3 percent above the October reading.
“An overwhelming majority of panelists indicate their companies are hiring or attempting to hire–86 percent of Employment Index comments were hiring focused,” Fiore said. “Fifty-one percent of those respondents expressed difficulty in filling positions, an increase from October.”
An Employment Index above 50.6 percent is usually consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Of 18 manufacturing industries, the 10 industries reporting employment growth in November were led by apparel, leather and allied products, and includes furniture and related products. The five industries reporting a decrease in employment in November were led by textile mills.
The delivery performance of suppliers to manufacturing organizations was slower in November, as the Supplier Deliveries Index registered 72.2 percent, 3.4 percent lower than October. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.
Sixteen of 18 industries reported slower supplier deliveries in November, topped by apparel, leather and allied products and including furniture and related products and textile mills.
The Inventories Index was 56.8 percent in November, 0.2 percent lower than October. An Inventories Index greater than 44.5 percent is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories.
“Manufacturing inventories continued to expand due to panelists’ companies continuing to stock more raw materials to help avoid production shortages, as well as growth in work-in-process and finished-goods inventories due to specific part shortages and holdbacks from some customers in several industries,” Fiore said.
The 10 industries reporting higher inventories in November were led by apparel, leather and allied products and included furniture and related products.
ISM’s Customers’ Inventories Index registered 25.1 percent in November, 6.6 percent less than October, indicating that customers’ inventory levels were considered too low.
No industries reported higher customers’ inventories in November. The 15 industries reporting customers’ inventories as too low during November included furniture and related products.
The ISM Prices Index hit 82.4 percent, a decrease of 3.3 percent compared to October, indicating raw materials prices increased for the 18th consecutive month but at a slower rate in November. This is the 15th month in a row that the index has been above 60 percent and the 12th consecutive month it has exceeded 70 percent.
A Prices Index above 52.7 percent is generally consistent with an increase in the BLS Producer Price Index for Intermediate Materials. In November, all 18 industries reported paying increased prices for raw materials, led by apparel, leather and allied products and including textile mills and furniture and related products/.
ISM’s Backlog of Orders Index registered 61.9 percent in November, a 1.7-percent decrease compared to October, indicating order backlogs expanded for the 17th straight month. This is the 10th consecutive month with a reading above 60 percent.
The 13 industries reporting growth in order backlogs in November were topped by apparel, leather and allied products. The only industry reporting lower backlogs in November was Textile Mills.
ISM’s New Export Orders Index registered 54 percent in November, down 0.6 percent compared to October.
ISM’s Imports Index was 52.6 percent in November, an increase of 3.5 percent from October.
“Imports expanded in November after one month of contraction, in spite of continuing challenges with throughput at U.S. ports of entry,” Fiore said. “Overland transport challenges and container shortages continue to persist across the global supply chain, causing instability with import level projections. Imports will continue to be challenged through the end of 2021 and likely through the first half of 2022.”
The seven industries reporting growth in imports in November were led by textile mills.