Manufacturing ISM Up 12th Straight Month But Employment Slows to a Crawl

The manufacturing ISM expands with reports of record backlogs and difficulties in filling open positions.
Author:
Publish date:
ISM 2021-05

The Manufacturing ISM shows manufacturing growth for the 12th month. 

ISM Details

  • All five subindexes that directly factor into the Manufacturing PMI® were in growth territory. 
  • All of the six biggest manufacturing industries expanded, in the following order: Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; and Petroleum & Coal Products. 
  • The New Orders and Production indexes continued to expand at strong levels. The Supplier Deliveries Index continued to reflect suppliers’ difficulties in maintaining delivery rates, due to a lack of direct labor, transportation challenges and increased demand. 
  • All 10 subindexes were positive for the period.
  • A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Comments by ISM Chair Timothy Fiore

  • “Manufacturing performed well for the 12th straight month, with demand, consumption and inputs registering strong growth compared to April. Panelists companies and their supply chains continue to struggle to respond to strong demand due to the difficulty in hiring and retaining direct labor.
  • "Record backlog, customer inventories and raw material lead times are being reported. The manufacturing recovery has transitioned from first addressing demand headwinds, to now overcoming labor obstacles across the entire value chain” 
  • A reading of ‘too low’ for Customers’ Inventories Index is considered a positive for future production.”
  • “The manufacturing economy continued expansion in May. Business Survey Committee panelists reported that their companies and suppliers continue to struggle to meet increasing levels of demand."
  • "Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy."
  • Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential. 

Commodities in Short Supply 

Acrylates; Aluminum (2); Aluminum Products; Coatings; Corrugated Boxes (7); Electrical Components (8); Electronic Components (6); Foam Products (3); Labor — Temporary; Lumber (3); Medium-Density Fiberboard (MDF); Nylon Fiber (2); Ocean Freight (2); Plastic Containers; Plastic Products (4); Plastic Resins — Other (3); Polycarbonates; Polyethylene Terephthalate (PET) Products; Polypropylene (2); Polyvinyl Chloride (PVC) Resin; Printed Circuit Boards; Printed Circuit Board Assemblies; Semiconductors (6); Steel (6); Steel — Cold Rolled; Steel — Galvanized; Steel — Hot Rolled (7); Steel — Stainless (3); Steel Bars; Steel Products (4); Steel Tubing; and Wood — Pallets (2).

The number of consecutive months the commodity is listed is indicated after each item.

This report will add to reports regarding inflation concerns 

Mish

Manufacturing ISM Contracts Third Month, Production Down Sharper

The manufacturing sector entered its third month of contraction with production falling faster.

Manufacturing ISM Down 5th Month to Lowest Since June 2009

The US manufacturing slump continues unabated. Unlike the dip in 2015, this isn't energy related.

US Manufacturing Recession Begins: ISM Contracts First Time in 3 Years

The manufacturing ISM dipped below the 50 mark signaling contraction. New orders, production, and employment are down.

Manufacturing ISM Worst Since 2009 on Severe Contraction of Export Orders

The Manufacturing ISM is in the second month of contraction and the worst since June of 2009.

Another ISM/PMI Divergence: Non-Manufacturing

On April 3, I noted a huge discrepancy between the ISM manufacturing report and Markit’s PMI manufacturing report.

Jobs Rise 225,000 But Employment Fell by 89,000

The BLS reports jobs rose by 225,000 in January but the manufacturing recession continues.

Another Recession Warning: ISM Contracts 4th Month

ISM fired another recession warning today as the manufacturing contraction extends another month.

ISM-Markit Manufacturing Divergence Widens Again

The divergence between the ISM Report on Business and the Markit PMI manufacturing index widened this month. ISM increased slightly from 54.8 to 54.9 while the Markit reading declined slightly to an 8-month low of 52.7 from 52.8