Recent reports from the Institute for Supply Management (ISM), the Manufacturing Advocacy and Growth Network (MAGNET) and Team NEO indicate that economic activity in the nation’s manufacturing sector growth slowed somewhat in October 2021 but the manufacturing sector in Northeastern Ohio should continue to grow through 2025. The ISM report showed that its index of national factory activity for the month of October slipped slightly from the September index, but still indicates expansion in the manufacturing sector, which accounts for 12% of the U.S. economy. This is despite unprecedented obstacles to meet increasing demand, supply chain challenges, rising commodities prices and difficulties in transporting goods. Additionally, many pandemic-related issues such as employee absenteeism, inability to fill open positions and shutdowns due to worker illness and government restrictions continue to stifle manufacturing sector growth. The ISM report’s measure of supplier deliveries showed slower deliveries increased in October from September, meaning higher inflation for goods persisted. Notwithstanding these challenges, the manufacturing sector has been able to achieve seventeen consecutive months of growth.
Employment in the manufacturing sector is approximately 10% below pre-pandemic levels in Northeastern Ohio, according to the report from MAGNET and Team NEO, titled “Team NEO Quarterly Economic Review.” This trend is likely to continue through 2025. This is due, in part, to the struggles to fill open positions. However, another reason is that many manufacturing companies have adopted advanced manufacturing methods and equipment which utilize automation and technology, allowing them to increase production with less employees. The report goes on to state that manufacturing GDP is projected to increase by 8% through 2025, behind the expected national growth rate of 16%. Similarly, the national employment rate is expected to be below the pre-pandemic numbers by only 5%, compared to the 10% in Northeastern Ohio.
Both of these reports lend some degree of optimism to manufacturing in the near term. Challenges will continue to arise and companies must continue to confront them and initiate ways to overcome them. The team at HBK Manufacturing Solutions is tracking these challenges and is available to provide advice and counsel to your company to help you conquer them. Please contact us at manufacturing@hbkcpa.com.
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