Manufacturing growth in the United States saw a slowdown during October due to increasing challenges stemming from supply chain bottlenecks and labor shortages, according to a report from the Institute for Supply Management (ISM), a trade group of purchasing managers.
The ISM’s manufacturing activity index for October recorded a reading of 60.8%, marking a slight dip of 0.3% points from September’s 61.1%. Despite this decrease, any reading above 50 still indicates growth in the manufacturing sector. The report pointed out that manufacturers and suppliers grappled with an unprecedented number of obstacles as they worked to meet rising demand.
Oren Klachkin, the lead U.S. economist at Oxford Economics, noted that “manufacturers continued to face unprecedented shipping bottlenecks, input shortages, and difficulties filling vacant positions.”
The ISM report reflected how these supply chain issues were affecting various sectors, including a significant increase of 4.5% points in the prices paid index, which reached 85.7%. Manufacturers continued to experience surging prices for raw materials and component parts.
In October, all six of the most prominent manufacturing industries continued to register moderate to strong growth. Sixteen industries overall showed growth, with the top performers being in apparel, leather and allied products, and furniture and related products.
However, two industries reported a decrease in growth: wood products and nonmetallic mineral products.
Timothy R. Fiore, the head of ISM’s manufacturing survey committee, highlighted that U.S. companies faced specific challenges due to a rise in COVID cases in Southeast Asian countries where much semiconductor production takes place.
Additionally, labor shortages played a significant role, with 27% of respondents noting higher attrition rates as workers left for higher-paying jobs, and 5% mentioned sizable numbers of retirements.
Fiore predicted that the supply chain issues would persist well into the next year before a full resolution could be achieved.