Growth in U.S. manufacturing up in August despite problems

Growth in U.S. manufacturing accelerated in August despite the fact that companies were still struggling with supply chain problems.

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose four-tenths of a percentage point in August, to 59.9. Manufacturing had seen a slowdown in July when activity dipped to 59.5 from 60.6 in June.

Any reading above 50 indicates growth in the manufacturing sector. August marked the 15th consecutive month that manufacturing has grown after contracting in April 2020 when the coronavirus pandemic triggered nationwide business shutdowns.

Tom Fiore, chair of the ISM manufacturing survey committee, said the new report showed that manufacturers continued to struggle to meet surging demand while at the same time dealing with numerous supply chain disruptions.

“All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical basic materials, rising commodities prices and difficulties transporting products,” he said.

The new surge in COVID-19 cases added to those problems, Fiore said, by causing more worker absences and increased short-term shutdowns due to shortages of parts and difficulties in finding enough workers to staff assembly lines.

While supply chain problems remain severe, they have eased somewhat in the past few months with supplier delivery times falling.

Labor problems however increased with the employment index falling to 49.0 in August, down from 52.9 in July.

“While some of the recent price pressures have faded, supply constraints, and particularly labor shortages are still proving to be a drag,” Michael Pearce, senior U.S. economist at Capital Economics, said.