The Institute for Supply Management (ISM®) recently released its November 2021 Report on Business, a monthly publication that provides analysis of industry trends and statistics relevant to the national manufacturing industry based on surveys of purchasing and supply executives. The report examines the manufacturing industry and focuses on areas such as new orders, production, employment, inventory levels and prices among others. The sentiment of the report conferred continued optimism, with continuing month-over-month growth, despite the unceasing challenges that linger.
The Purchasing Managers Index (PMI®) is an indicator of the current direction of economic trends in the manufacturing and service sectors and is utilized to predict the state of the economy and the growth or contraction present within the industry. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. PMI® grew to 61.1% in November, up from 60.8% in October. This was the 18th consecutive month of growth. Despite the continued expansion, manufacturers continue to be uneasy about labor shortages and global supply chain disruptions. Although many companies surveyed indicated that hiring difficulties continue to persist, there is an increasing belief that the problems may be softening, despite the workforce continuing to turn over due to retirements and other employment departures.
Evidencing the concerns about the global supply chain, ISM®’s Imports Index was 52.6% in November following 49.1 percent in October, which was further a decrease of 5.8 percentage points compared to September’s figure of 54.9 percent. Imports contracted for the first time in October after 15 consecutive months of expansion verifying the concerns of many. Overland-transport challenges and container shortages continue to prevail across the global supply chain, exacerbating instability with imports. Imports will likely continue to be challenged through the first half of 2022.
Although challenges persist, the majority of manufacturing industries surveyed reported growth in November, with only the Printing & Related Support and Primary Metals industries showing a contraction in November. Demand continues to rise, shutdowns are declining, workforce problems are gradually subsiding and consumption is growing. These are all good signs for the near to mid-term future of the manufacturing industry. Improvements in supply chain disruptions could be paramount in accelerating the consistent growth.
The team at HBK Manufacturing Solutions continues to monitor the state of the manufacturing industry and is available to provide advice and counsel to your company. Please contact us at manufacturing@hbkcpa.com
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