ISM® has reported December Manufacturing PMI® of 58.7 percent for US manufacturers, a decrease of 2.4 percentage points from the November reading of 61.1 percent. This figure indicates expansion in the overall economy for the 19th month in a row after a contraction in April 2020.
According to the ISM release, the U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with indications of improvements in labor resources and supplier delivery performance. Shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption. Coronavirus pandemic-related global issues — worker absenteeism, short-term shutdowns due to parts shortages, employee turnover and overseas supply chain problems — continue to impact manufacturing. However, panel sentiment remains strongly optimistic, with six positive growth comments for every cautious comment, down slightly from November. ISM’s Semiannual Economic Forecast, released in December, indicates a strong 2022 performance expectation in terms of revenue growth and profitability.
“Manufacturing performed well for the 19th straight month, with demand and consumption registering month-over-month growth,” says Timothy R. Fiore, Chair of the ISM® Manufacturing Business Survey Committee. “Meeting demand will remain a challenge, due to hiring difficulties and a clear cycle of labor turnover at all tiers. For the second month in a row, Business Survey Committee panelists’ comments suggest month-over-month improvement on hiring, offset by backfilling required to address employee turnover. Supplier delivery rate improvement was indicated by the Supplier Deliveries Index softening in December. Transportation networks, a harbinger of future supplier delivery performance, are still performing erratically; however, there are signs of improvement.”
ISM® REPORT COMMENTS (U.S.)
- “Chemical supply chains are filling very slowly. Still not full, but (my) gut feeling says it’s getting easier to source chemical raw materials.” Chemical Products
- “Continued strong demand has our production facilities producing as many vehicles as we have materials for; however, capacity is limited due to the global chip shortage.” Transportation Equipment
- “Lowered oil prices due to (the) omicron variant has caused concern around production and capital spend in 2022.” Petroleum and Coal Products
- “Labor is still tight, and turnover continues. Supply chain issues are is still causing customer order cuts. Trucks are scarce, and the teams are burned out from working long hours and dealing with supply constraints daily.” Food, Beverage and Tobacco Products
- “Price increases appear to be slowing. Lead times are shrinking slowly, and inventories are growing. I hope we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal.” Fabricated Metal Products
- “Business continues to be good, with strong incoming orders from customers. Continue to battle labor, material and transportation pressures.” Furniture and Related Products
- “Construction projects for 2022 and 2023 look very strong for us.” Nonmetallic Mineral Products
- “Costs for steel seem to be coming down some. We have seen a little relief on steel prices, but they are still very high. Overall performance by suppliers has improved. On-time deliveries have improved.” Machinery
- “Supply chain interruptions have dramatically increased in the fourth quarter. Many of our suppliers are unable to deliver product until January or February 2022 or later.” Miscellaneous Manufacturing
- “Very robust order activity. Backlog increased. Plastic raw material shortages impact orders.” Plastics and Rubber Products
US SECTOR REPORT
ISM GROWTH SECTORS (15): Apparel, Leather and Allied Products; Furniture and Related Products; Textile Mills; Plastics and Rubber Products; Machinery; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; Electrical Equipment, Appliances and Components; Fabricated Metal Products; Computer and Electronic Products; Food, Beverage and Tobacco Products; Transportation Equipment; Primary Metals; and Petroleum & Coal Products.
ISM CONTRACTION SECTORS (3): Wood Products; Printing and Related Support Activities; and Paper Products.
GLOBAL PMI CHARTS
Credit: Institute for Supply Management®, ISM®, PMI®, Report On Business®. For more information, visit the ISM® website at www.ismworld.org.