The headline manufacturing Purchasing Managers’ Index increased by 1.2 percentage points in September, to 61.1%, continuing to indicate overall expansion of the manufacturing sector.
The big picture remains unchanged: Strong demand persists, yet firms continue to struggle with supply chain issues.
The increase in the overall index, the 16th in a row dating to April 2020, was driven by upticks in prices paid and in supplier delivery components, which rose by 1.8 and 3.9 percentage points, respectively, according to data released Friday.
The big picture remains unchanged: Strong demand persists, yet firms continue to struggle with supply chain issues. New order components remained elevated at 66.7%, while the backlog of orders was high at 64.8% and customer inventories were low at 31.7%.
“All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting product,” the report said.
Labor shortages were also in focus.
“Labor availability is the most significant supply challenge for our company,” one respondent said in the survey. Another said, “We used to have 100 applicants for an opening; we are now seeing about 10—and often, the applicant does not show for the interview.”
Despite the hurdles, the six biggest manufacturing industries—petro and coal; computer and electronic; chemical; food, beverage and tobacco; fabricated metal; and transportation equipment—registered moderate growth in September.
We expect that problems from supply bottlenecks and labor shortages will persist, while strong demand for manufactured products will continue to alleviate some of those problems in the coming months.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.