Highlights of the November ISM Manufacturing Report

Date December 13, 2021
Authors James Dascenzo
Categories

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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Manufacturing Growth Slows in October; Growth Expected Through 2025

Date November 16, 2021
Authors James Dascenzo
Categories

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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