The manufacturing supply chain is slowly unraveling

Manufacturing supply chains have begun the long unraveling process, leading to a slight rise in the Institute for Supply Management’s monthly PMI index.

The PMI index rose 0.3 percentage points to 61.1% in November, the 18th consecutive month of index growth. While supply disruptions and labor shortages remain the main obstacles to further manufacturing growth, there were small signs of improvement, according to Timothy R. Fiore, chair of the ISM Manufacturing Business committee. Survey.

“Manufacturing has performed well for the 18th consecutive month, with demand and consumption growing month over month, despite persistent hurdles,” Fiore said in a press release. “Meeting demand remains a challenge, given the challenges of hiring and a clear cycle of workforce turnover at all levels. Panelist comments suggest month-over-month hiring improvement, offset by replacement required to cope with staff turnover. Indications that supplier delivery rates are improving were supported by the easing of the supplier delivery index. Transportation networks, a harbinger of future supplier delivery performance, continue to operate erratically. ”

Three of the key manufacturing growth indicators all moved in the right direction in November. The new orders index was 61.5%, up 1.7 percentage points from the October reading of 59.8%. The production index registered 61.5%, an increase of 2.2 percentage points from the October reading of 59.3%. The price index registered 82.4%, down 3.3 percentage points from October’s figure of 85.7%

“The US manufacturing sector remains in a demand-driven, supply-chain constrained environment, with some indications of slight improvement in workforce and supplier delivery. All segments of the manufacturing economy are affected by record times for raw materials and capital goods, continued shortages of lower level critical materials, high raw material prices and product transportation difficulties ”, Fiore said. “Global issues related to the coronavirus pandemic – worker absenteeism, short-term closures due to parts shortages, difficulties filling vacancies, and overseas supply chain issues – continue to limit the potential for growth in manufacturing. However, the sentiment of the panel remains strongly optimistic, with 10 positive growth comments for every cautious comment. Panelists remain focused on the importance of improving supply chain issues to meet ongoing high levels of demand. “

Among the comments of the panelists:

  • “International component shortages continue to delay fulfillment of customer orders. The order book continues to increase. (Computer and electronic products)
  • “The petrochemical supply chain is slowly showing signs of improvement after multiple weather disruptions in 2021.” (Chemical products)
  • “The big drops in volume due to a shortage of chips. “(Transport equipment)
  • “Oil is up, but our capital spending remains stable for now. No new orders for the moment. (Petroleum and coal products)
  • “All input costs are increasing dramatically, across the board. “(Food, beverages and tobacco products)
  • “As the prices for hot-rolled sheet steel and coil appear to be approaching a plateau, the biggest challenge we have right now is finding skilled workers. “(Fabricated metal products)
  • “We are still seeing shortages with various metals. Plastic resins seem to improve slowly. Delivery times for electronic components are always changing. (Electrical equipment, devices and components)
  • “The business is strong but it is difficult to meet customer demand due to a shortage of raw materials and labor. “(Furniture and related products)
  • “During the first nine months of the year trading conditions were out of the ordinary and sales far exceeded capacity. This took the backlog to record levels and, surprisingly, customers were willing to wait, albeit reluctantly. However, there appears to be a flattening: sales remain strong but not growing at the same rate month over month compared to the previous six to nine months. “(Machinery)
  • “We are experiencing significant supply chain disruptions resulting in historically long delivery times to get products to our customers. Inflationary pressures based on commodities are widespread and traditional ways of dealing with these pressures are not effective due to unprecedented demand. “(Miscellaneous Manufacturing)
  • “We are starting to take a break in plastic resins, with lower prices (in November) for ethylene and propylene-based resins. Starting to notice improvement in uptime / turnaround time as well. (Plastics and rubber products)


Source link

Comments are closed.