Growth in the U.S. manufacturing sector slowed slightly in June as supply chain problems persist and companies say they still struggle to find workers to meet demand.
The Institute for Supply Management, a professional group of purchasing managers, said Thursday its manufacturing activity index fell in June to 60.6 from 61.2 in May.
Any reading above 50 indicates manufacturing is expanding. June was the 13th consecutive month of manufacturing growth following a contraction in April 2020, when coronavirus fears sparked business closures across the country.
Production, which rose to 60.8 last month, could have seen an even greater increase without raw material shortages and labor issues including absenteeism and turnover.
The employment index plunged into contracting territory, falling to 49.9 in June from 50.9 in May. An overwhelming majority of panelists surveyed said their companies were hiring or trying to hire, with more than a third of them having difficulty filling positions. Panelists said staff turnover attributed to “wage dynamics” was a problem – in other words, workers were quitting their jobs for better pay.
On Thursday, it was no accident that the Department of Labor reported that the number of Americans seeking unemployment assistance fell again last week to the lowest level since the pandemic struck last year. The vaccine rollout has sharply reduced new cases of covid-19, giving consumers the confidence to go out and spend the money.
These accumulated expenses have created a need for workers almost overnight, and employers are struggling to fill jobs and keep up with demand.
âLack of manpower is killing us,â said one respondent. âThe workforce has been a concern,â said another.
In addition to demand, persistent supply chain problems and material shortages are pushing prices up to levels not seen in over 40 years.
“High delay levels, too low customer inventories and record delivery times for raw materials are being reported,” said Timothy Fiore, chairman of the institute’s manufacturing companies inquiry committee, in a statement. communicated. âThe challenges of working across the entire value chain continue to be the main obstacles to increasing growth. “
The index of prices paid for raw materials rose to 92.1, a level not seen since the 1979 Iranian revolution and the oil crisis. Logistics challenges, high raw material prices and shortages of various supplies continue to put manufacturers under pressure.
Semiconductor shortages were particularly disruptive for the auto industry, where production at the start of the year was limited due to lack of supply.
âVirtually all basic and intermediate manufacturing materials are experiencing price increases due to product scarcity and supply and demand dynamics, with a growing number of panelists reporting higher prices than in May. âFiore said.
The monthly jobs report released by the government today is expected to show manufacturing payrolls increased by 25,000 in June, the most in three months.
Information for this article was provided by Vince Golle of Bloomberg News (WPNS).