Manufacturing index continues positive trend in March

Manufacturing continues its torrid pace with the Institute for Supply Management’s Purchasing Manufacturers’ Index (PMI) jumping almost 4% to 64.7%. The industry has rebounded nicely after the swoon in mid-2020 due to the COVID-19 pandemic and things are looking up for the industrry. New orders, production and employment all enjoyed solid growth in March, according to Timothy Fiore, the chair of the Institute for Supply Management’s (ISM) Manufacturing Business Survey Committee:

“The manufacturing economy continued its recovery in March,” Fiore said in a press release. “However, Survey Committee Members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials. Extended lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are affecting all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.”

The six biggest manufacturing industries — Computer and electronic products; fabricated metal products; food, beverage and tobacco products; transportation equipment; chemical products; and petroleum and coal products — registered strong growth in March. Seventeen of 18 industries reported growth in March and none reported contraction.

What respondents are saying

  • “Late-winter storms in unexpected [areas] of the U.S. had our organization exercising business-continuity plans on a much more aggressive scale than anticipated. While the storms slowed our supply chain down, we did what we could to meet orders, even though few were short. We feel that in the coming month, we will be able to make up the misses as well as continue strong deliveries in the next month. As consumer confidence grows and the academia market reopens globally, we do expect orders to increase.” (Computer and electronic products)
  • “Demand remains strong. Significant supply impacts on raw materials due to the Texas freeze. All major raw-material and suppliers on force majeure.” (Chemical products)
  • “Business conditions are positive for our industry and company. The constraints are mainly related to parts availability (imports, supply chain congestion). Manpower is also a constraint; hiring new members is a challenge.” (Transportation equipment)
  • “Winter Storm Uri has made daily life in supply chain quite a challenge. Everything from plastic substrates to adhesives have been significantly impacted by the production interruptions.” (Food, beverage and tobacco products)
  • “The spring and summer months look great for the national oil markets.” (Petroleum and coal products)
  • “A lack of qualified machine and fabrication shop talent makes it difficult to keep up with production demands when there is no backup (second string). Qualified new hires are an ongoing challenge. We have had to provide better compensation to keep qualified talent. Raw-material prices are up 50 percent to 60 percent over the last six months, which results in increased prices to our customers and a disincentive to build inventory.” (Fabricated metal products)
  • “Widespread supply chain issues. Suppliers are struggling to manage demand and capacity in the face of chronic logistics and labor issues. No end in sight.” (Machinery)
  • “Business is even stronger for us this year through the third quarter, and we expect a very healthy growth of our manufacturing sales.” (Electrical equipment, appliances and components)
  • “Tremendous stress on the supply chain since the winter storm in Texas. Chemicals are on allocations or unavailable. Resin is on allocation and unavailable.” (Plastics and rubber products)

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