Manufacturing activity in the US grew for the twelfth successive month in May, though producers are finding it exceedingly difficult to keep up with demand due to tight supply and labor shortages, according to the latest Institute of Supply Management’s (ISM’s) Manufacturing PMI.
The country’s manufacturing PMI increased by 0.5 percentage points last month to 61.2pc on a monthly basis led by a 2.7 percentage points rise in new orders to 67pc and a 2.4 percentage points climb in backlog of orders to 70.6pc.
Still, the ISM data indicated that the production index decreased by four percentage points to 58.5pc as consumption softened despite higher inputs as reflected in the rise in supplier deliveries which increased by 3.8 percentage points to 78.8pc and inventories and imports that rose by 4.3 percentage points and 1.8 percentage points to 50.8pc and 52.2pc, respectively, in May against the previous month.
Fabricated metals and transportation equipment were among the six biggest manufacturing sectors to register strong growth last month, ISM indicated. This, despite supply chains, continuing to remain constricted amid a shortage of labor.
An ongoing shortage in components has forced many in the transportation equipment industry to look at dual sourcing and strategize their long-term supply needs, while labor shortages are proving to be a headwind in the fabricated and primary metals industry, leading to longer lead times. Fabricators believe that the situation is likely to improve only after Q4 2021, ISM noted.
As a result, prices of commodities like aluminum and its products, copper, and copper products cold-rolled and galvanized steel, ferrous scrap, stainless steel, and stainless steel components have risen over the past month.