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Growth in the U.S. manufacturing sector retreated from a 37-year high last month, as manufacturers faced strong demand amid rising parts shortages and rising commodity prices.
The Institute for Supply Management said Monday that its manufacturing activity measurement index fell to 60.7 from a reading of 64.7 in March, which marked the strongest growth rate since of December 1983.
Economists sought to accelerate growth in April, calculating that the ISM index would rise to 65.
Scarcity of semiconductors and other parts has wreaked havoc on supply chains, leading to a key shift in manufacturers’ ability to meet demand, as vaccinations and declining coronavirus cases fuel a rebound in the northern economy. -americana.
Factories have also faced rising prices for various materials. ISM survey index prices paid by manufacturers rose four points to 89.6, their highest reading since July 2008.
Timothy Fiore, chairman of ISM’s manufacturing business inquiry committee, said members of the group “reported that their companies and suppliers continue to struggle to meet rising demand rates due to the impacts of coronavirus (Covid- 19) that limit the availability of parts and materials ”.
“Recent delivery deadlines, the large-scale shortage of critical commodities, rising commodity prices and difficulties in transporting products continue to affect all segments of the manufacturing economy,” he said.
According to Fiore, temporary shutdowns in production due to shortage of parts, absenteeism of workers and challenges to fill vacancies have also limited the growth potential of the sector.
However, business optimism improved during the month as demand remained high, recruitment increased for the fifth consecutive month and order delays continued to grow to record levels.
Oxford Economics analysts said the “underlying details of the report were generally encouraging.”
“Manufacturing remains resilient and factories will not run out of gas once demand shifts further into services and away from goods. Looking to the future, the replenishment of inventories, the increase in capital investment, the fiscal stimulus and the reactivation of global growth will support favored manufacturing activity, ”they added.
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