U.S. Manufacturers Cite ‘Labor Issues’ and ‘Supply Constraints’

By Sourcing Journal

This article was published in Sourcing Journal June 2, 2021. It highlights the current challenges constraining U.S. manufacturing output. A similar Reuters analysis focusing on general manufacturing is available here.

A Wall Street Journal article yesterday deemed the Southwest to be "America's new manufacturing hub."

Economic activity in the U.S. manufacturing sector grew in May, the nation’s supply executives said in the latest Manufacturing Institute for Supply Management (ISM) “Report On Business.”

The May Manufacturing Purchasing Managers Index (PMI) registered 61.2 percent, a 0.5 percentage point increase from the April reading of 60.7 percent, according to Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. A Manufacturing PMI above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy.

“The manufacturing economy continued expansion in May,” Fiore said. “Business Survey Committee panelists reported that their companies and suppliers continue to struggle to meet increasing levels of demand. Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect 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.”

Optimistic panel sentiment increased, with 36 positive comments for every cautious comment, compared to an 11-to-1 ratio in April, Fiore noted. Consumption, measured by the production and employment indexes, indicated slowing expansion, posting a combined 8.2 percent point decrease to the Manufacturing PMI calculation. The report said consumption “was clearly limited due to labor issues and supply constraints, as demand remains very high.”