November Sustains Growth In Manufacturing Despite Renewed Labor Shortages

Manufacturing activity remained on the up in November despite headwinds, according to the Institute for Supply Management. The ISM’s Purchasing Manager’s Index fell 1.8 points to 57.5% in November from October’s PMI of 59.3%. New orders, production, prices, inventories and imports all continued to grow in November, but at a slower rate than in October. The index for new orders fell 2.8 points to 65.1%, the production index fell 2.2 points to 60.8%, the inventory index fell 0.7 points to 51.2%, and imports fell 3.0 points to 55.1%. The rate of growth in prices was steady, as it fell just 0.1 points to 65.4%.

Meanwhile, two indexes—backlog of orders and new export orders—rose at a faster rate than in October. The order backlog index rose 1.2 points to 56.9% and the new export orders index rose 2.1 points to 57.8%.

Manufacturing employment returned to contraction after expanding in October, when it broke a 14-month streak of contraction: In November, the ISM’s manufacturing employment index fell 4.8 points to 48.4%. In a release, Timothy Fiore, President of the ISM, said absenteeism and difficulties in returning and hiring workers was a limiting factor for manufacturing growth. The speed of supplier deliveries fell for a thirteenth straight month at a faster rate than previous months.

Of 18 surveyed manufacturing industries, 16 reported growth, with apparel and leather, nonmetallic mineral products, and textile mills reporting the strongest growth. Printing-related and petroleum manufacturers reported contraction.

Several survey responses indicated that the ongoing COVID-19 pandemic, which is currently riding its largest surge yet, is putting pressure on suppliers’ labor demands. An executive in the Transportation Equipment industry noted: “The resurgence in COVID-19 cases is adding strain on our Tier-1 and Tier-2 suppliers. Multiple suppliers mentioned that finding new people is an issue with the COVID-19 situation.”

A member of the food and beverage industry said they had to shut down production lines due to lack of staffing after sending employees home for 14 days to quarantine. Executives from the electronics and plastics industries also complained that their suppliers were suffering from labor shortages.

Besides from supplier labor, personal protective equipment continues to be in short supply, gloves in particular: the ISM reports that PPE gloves have now been listed as “in short supply” for 9 months now. Other commodities manufacturers are having trouble getting their hands on are aluminum products, corrugate boxes, disinfectant, electrical components, PPE masks, hot rolled steel, and steel products. Aluminum and steel products, as well as electrical components, have been listed as in short supply for two months now.

“Manufacturing performed well for the sixth straight month, with demand, consumption and inputs registering growth, but at slower rates compared to October. Labor market difficulties, both current and anticipated, at panelists’ companies and their suppliers will continue to dampen the manufacturing economy until the coronavirus (COVID-19) crisis ends,” says Fiore.

Source: IndustryWeek, 12.01.2020

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