Economic activity in the manufacturing sector grew in July, with the overall economy notching a 14th consecutive month of growth, according to the nation's supply executives surveyed in the latest Manufacturing ISM Report on Business.
Produced by the Institute of Supply Management,
the purchasing managers' index (PMI), is a monthly indicator of U.S. economic activity based on a survey of the purchasing managers at more than 300 manufacturing firms.
The July PMI was 59.5%, a decrease of 1.1% from the June reading of 60.6%. This figure indicates expansion in the overall economy for the 14th month in a row after contraction in April 2020.
The Backlog of Orders Index registered 65%, 0.5% higher than the June reading of 64.5%. The Supplier Deliveries Index was 72.5%, down 2.6% from the June figure of 75.1%. The Inventories Index was 48.9%, 2.2% lower than the June reading of 51.1%.
Survey Committee panelists also expressed concerns, including that they and their suppliers continue to struggle to meet increasing demand.
“As we enter the third quarter, all segments of the manufacturing economy are impacted by near record-long raw-material lead times, continued shortages of critical basic materials, rising commodities prices and difficulties in transporting products,” said committee chair Timothy R. Fiore.
A machinery company respondent says, “Supply chain continues to be extremely challenging in a variety of categories. Having to place orders months ahead of time just to get a place in line.”
“Supply chains are slowly, very slowly filling up. Like a water hose, starting upstream and slowly flowing downstream,” says a chemical executive.
“Rumor is a full return to ‘normal’ may be nearer to year’s end, but the situation is progressing. Transportation (equipment and drivers) is the current pinch point, more so than material shortages.”