The US manufacturing industry grew in April but at a slower pace compared to March as manufacturers struggled to fulfill orders due to strong demand, according to the Institute of Supply Management’s (ISM’s) April manufacturing PMI.
April PMI was reported at 60.7pc, down four basis points from March, while the new orders index on the manufacturing PMI reduced by 3.7 basis points to 64.3pc in April against the previous month. ISM’s production index fell by 5.6 basis points to 62.5pc whereas its order backlog index grew by 0.7 basis points to 68.2pc during this period.
Timothy R. Fiore, chair of ISM’s manufacturing business survey committee, noted that the availability of parts and materials remained limited as suppliers struggled to fulfill pent-up demand after a year of varied shutdowns. He also attributed the declines to longer lead times, higher commodity prices as well as transportation and labor shortages in April.
In terms of prices, aluminum and aluminum extrusions and products, copper and copper products, steel and finished steel products like cold-rolled and hot-rolled steel, and stainless steel registered a significant rise in prices. Steel product prices rose due to short supply, ISM noted.
Still, fabricated metal products led the industrial sector that reported a strong to moderate growth in April, followed by chemicals, food, beverage and tobacco, computer and electronics, transportation equipment, and petroleum and coal products industries.
Moreover, industries responding to the ISM survey noted that the semiconductor shortage had a considerable impact on lead times and pricing, especially in the automotive sector. They expect the overall supply-demand metric in the manufacturing sector to balance out by Q3 or Q4 2021.
In the fabricated metals industry, respondents to the ISM survey were concerned about the exorbitant steel prices as well as long lead times. Industrialists noted that imported steel prices were warped due to the Section 232 tariffs at present.
Respondents from the primary metals market said that the industry continued to remain challenged by a shortage of raw materials, especially in the aluminum and steel sectors. Here too, respondents noted the high prices as well as transportation shortages.