TEMPE, Ariz. — November 1, 2021 — Economic activity in the manufacturing sector grew in October, with the overall economy achieving a 17th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The October Manufacturing PMI registered 60.8 percent, a decrease of 0.3 percentage point from the September reading of 61.1 percent. This figure indicates expansion in the overall economy for the 17th month in a row after a contraction in April 2020. The New Orders Index registered 59.8 percent, down 6.9 percentage points compared to the September reading of 66.7 percent. The Production Index registered 59.3 percent, a decrease of 0.1 percentage point compared to the September reading of 59.4 percent. The Prices Index registered 85.7 percent, up 4.5 percentage points compared to the September figure of 81.2 percent. The Backlog of Orders Index registered 63.6 percent, 1.2 percentage points lower than the September reading of 64.8 percent. The Employment Index registered 52 percent, 1.8 percentage points higher compared to the September reading of 50.2 percent. The Supplier Deliveries Index registered 75.6 percent, up 2.2 percentage points from the September figure of 73.4 percent. The Inventories Index registered 57 percent, 1.4 percentage points higher than the September reading of 55.6 percent. The New Export Orders Index registered 54.6 percent, an increase of 1.2 percentage points compared to the September reading of 53.4 percent. The Imports Index registered 49.1 percent, a 5.8-percentage point decrease from the September reading of 54.9 percent.”

Fiore continues, “Business Survey Committee panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand. All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products. Global pandemic-related issues — worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems — continue to limit manufacturing growth potential. However, panel sentiment remains strongly optimistic, with four positive growth comments for every cautious comment. Panelists are fully focused on supply chain issues in order to respond to the ongoing high levels of demand. Demand expanded, with the (1) New Orders Index growing, supported by continued expansion of the New Export Orders Index, (2) Customers’ Inventories Index remaining at very low levels, and (3) Backlog of Orders Index staying at a very high level. Consumption (measured by the Production and Employment indexes) grew during the period, with a combined 1.7-percentage point increase to the Manufacturing PMI® calculation. Although the Employment Index expanded for a second month, hiring difficulties at panelists’ companies show no significant signs of abating. Inputs — expressed as supplier deliveries, inventories, and imports — continued to help constrain production expansion, especially with a contraction in imports, compared to September. The Supplier Deliveries Index slowed, while the Inventories Index continued to expand faster due to (1) work-in-process inventory held longer due to key part shortages and (2) more finished goods inventory held due to downstream customer issues. The Prices Index expanded for the 17th consecutive month, at a faster rate in October, indicating continued supplier pricing power and scarcity of supply chain goods.

“All of the six biggest manufacturing industries — Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; Petroleum & Coal Products; and Transportation Equipment, in that order — registered moderate to strong growth in October.

“Manufacturing performed well for the 17th straight month, with demand and consumption registering month-over-month growth, in spite of continuing unprecedented obstacles (including the Imports Index moving into contraction territory) and ever-increasing demand. Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labor turnover: As workers opt for more attractive job opportunities, panelists’ companies and their suppliers struggle to maintain employment levels. Disruptions from COVID-19, primarily in Southeast Asia, continue to have an impact on many industry sectors. Congestion at ports in China and the U.S. continues to be a headwind, as transportation networks remain stressed. Demand remains at strong levels, despite increasing prices,” says Fiore.

The 16 manufacturing industries reporting growth in October — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Electrical Equipment, Appliances & Components; Machinery; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Paper Products; Primary Metals; and Transportation Equipment. The two industries reporting a decrease in October compared to September are Wood Products; and Nonmetallic Mineral Products.

What Respondents Are Saying

“Global supply chain issues continue. Getting anything from China is near impossible — extreme delays. Microchip and circuit breaker shortages continue and are expected to continue into 2022.” [Computer & Electronic Products]

“Business is getting stronger, but the supply chain is getting worse every day.” [Chemical Products]

“Strong sales continue; however, we have diverted chips (semiconductors) to our higher-margin vehicles and stopped or limited the lower-margin vehicle production schedules.” [Transportation Equipment]

“Import costs and delays hurting business requiring more safety stock for uncertainty. Rolling blackouts in China starting to hurt shipments even more.” [Food, Beverage & Tobacco Products]

“Domestic original equipment manufacturer (OEM) capital-expenditure spending is trending up for our business. We are seeing an increase of capital equipment with life spans of more than 10 years in the fourth quarter.” [Fabricated Metal Products]

“Demand continues to be strong, but we continue to be held back by supply chain issues — logistics delays, as well as capacity and labor issues at suppliers.” [Electrical Equipment, Appliances & Components]

“Business remains strong, with brisk incoming orders. We have become much more supply driven versus demand driven, due to shortages of labor, materials and freight. Costs continue to increase on all fronts, and we are considering our third price increase of the year for our customers.” [Furniture & Related Products]

“Customer demand remains high. COVID-19 related supply chain issues still hamper our ability to meet demand. Labor is still difficult for our suppliers to obtain, and labor costs are rising.” [Machinery]

“Demand for our products remains strong, but we continue to struggle to secure enough raw material to keep our manufacturing lines running.” [Miscellaneous Manufacturing]

“My prediction is that 2022 will be very similar to 2021 — similar demand, constrained supply, restricted logistics and rampant inflation.” [Plastics & Rubber Products]

Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.

*Number of months moving in current direction.

Commodities Reported Up/Down In Price And In Short Supply

Commodities Up in Price
 — Adhesives (4); Aluminum (17); Aluminum Products (7); Caustic Soda (5); Copper (2); Copper-Based Products; Corn; Corrugate (13); Corrugated Packaging (12); Crude Oil; Diesel Fuel (10); Electrical Components (11); Electronic Components (11); Foam (2); Freight (12); Isocyanate; Labor — Temporary (6); Logistics Services (2); Maintenance, Repair, and Operations (MRO) Supplies (2); Motors; Natural Gas (4); Nylon; Ocean Freight (11);  Packaging Supplies (11); Pallets (4); Paper (2); Phosphates; Plastic Containers (2); Plastic Resins (14); Polyester Resin; Polyethylene (9); Polyethylene Terephthalate (PET); Polypropylene (16); Polyvinyl Chloride (PVC); Printed Circuit Board Assemblies (PCBAs); Printed Circuit Boards (PCBs); Resin-Based Products (9); Rubber-Based Products (3); Semiconductors (9); Steel (15); Steel — Bars; Steel — Carbon (11); Steel — Cold Rolled (3); Steel — Drums (2); Steel — Hot Rolled (14); Steel — Stainless (12); Steel Products (14); and Tin Products.

Commodities Down in Price
 — Wood (3).

Commodities in Short Supply
 — Adhesives and Paints (4); Caustic Soda; Corrugated Packaging (4); Electrical Components (13); Electronic Components (11); Foam; Freight (2); Labor — Temporary (6); Ocean Freight (7); Ocean Freight Containers; Packaging Supplies; Pallets; Phosphates; Plastic Containers (2); Plastic Products (9); Plastic Resins — Other (8); Polyvinyl Chloride (PVC) (2); Printed Circuit Board Assemblies (PCBAs) (3); Rubber-Based Products (3); Semiconductors (11); Silane; Silicon; Steel (11); Steel — Hot Rolled (12); Steel — Stainless (8); and Steel Products (9).

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

October 2021 Manufacturing Index Summaries 

Manufacturing PMI®

Manufacturing grew in October, as the Manufacturing PMI registered 60.8 percent, 0.3 percentage point lower than the September reading of 61.1 percent. “The Manufacturing PMI® continued to indicate strong sector expansion and U.S. economic growth in October. 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: Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; Petroleum & Coal Products; and Transportation Equipment. The New Orders and Production indexes remained at strong levels. The Supplier Deliveries Index continued to reflect suppliers’ difficulties in maintaining delivery rates, due to persistent direct-labor and transportation challenges. Nine of the 10 subindexes were positive for the period; a reading of ‘too low’ for the Customers’ Inventories Index is considered a positive for future production,” said Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A Manufacturing PMI above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the October Manufacturing PMI indicates the overall economy grew in October for the 17th consecutive month following contraction in April 2020. “The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for October (60.8 percent) corresponds to a 5-percent increase in real gross domestic product (GDP) on an annualized basis,” said Fiore.

THE LAST 12 MONTHS

New Orders

ISM’s New Orders Index registered 59.8 percent in October, a decrease of 6.9 percentage points compared to the 66.7 percent reported in September. This indicates that new orders grew for the 17th consecutive month. “All of the six largest manufacturing sectors — Chemical Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Computer & Electronic Products; Fabricated Metal Products; and Transportation Equipment, in that order — expanded at moderate to strong levels,” says Fiore. A New Orders Index above 52.8 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

Fourteen of 18 manufacturing industries reported growth in new orders in October, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Printing & Related Support Activities; Textile Mills; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; Machinery; Petroleum & Coal Products; Miscellaneous Manufacturing; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Transportation Equipment. The two industries reporting a decline in new orders in October are Nonmetallic Mineral Products; and Plastics & Rubber Products.

Production

The Production Index registered 59.3 percent in October, 0.1 percentage point lower than the September reading of 59.4 percent, indicating growth for the 17th consecutive month. “All of the top six industries — Petroleum & Coal Products; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Transportation Equipment; and Food, Beverage & and Tobacco Products, in that order — expanded at strong to moderate levels. Raw materials continued to be a constraint to production growth, as manufacturing inventories continued to expand. Staffing levels on the factory floor remain an obstacle, with direct-labor turnover and retirements continuing a negative trend,” said Fiore. An index above 52.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The 10 industries reporting growth in production during the month of October — listed in order — are: Petroleum & Coal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Machinery; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; Transportation Equipment; and Food, Beverage & Tobacco Products. The four industries reporting a decrease in October are: Printing & Related Support Activities; Wood Products; Primary Metals; and Plastics & Rubber Products.

Employment

ISM’s Employment Index registered 52 percent in October, 1.8 percentage points above the September reading of 50.2 percent. “The Employment Index reported a second month of expansion. Of the six big manufacturing sectors, three (Computer & Electronic Products; Fabricated Metal Products; and Chemical Products) expanded. Survey panelists’ companies are still struggling to meet labor-management plans, but for a second month, there were modest signs of progress: An increasing percentage of comments noted improvements regarding employment, compared to less than 5 percent in September. An overwhelming majority of panelists indicate their companies are hiring or attempting to hire — 90 percent of Employment Index comments were about seeking additional staffing. Twenty-eight percent of those respondents expressed difficulty in filling positions, a decrease from September. The increasing frequency of comments on turnover rates and retirements in October continued a trend that began in August,” says Fiore. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of 18 manufacturing industries, the 11 industries reporting employment growth in October — in the following order — are: Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Furniture & Related Products; Printing & Related Support Activities; Plastics & Rubber Products; Machinery; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing. The six industries reporting a decrease in employment in October — listed in order — are: Wood Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

Supplier Deliveries†


The delivery performance of suppliers to manufacturing organizations was slower in October, as the Supplier Deliveries Index registered 75.6 percent, 2.2 percentage points higher than the 73.4 percent reported in September. All six top manufacturing industries — Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Chemical Products; and Petroleum & Coal Products, in that order — reported slowing deliveries. “Deliveries slowed at a faster rate compared to the previous month. The index continues to reflect suppliers’ difficulties in meeting panelist companies’ demand, including (1) ongoing supplier hiring challenges, (2) extended raw materials lead times for all tiers, (3) increasing levels of input material shortages, (4) stubbornly high prices and (5) inconsistent transportation availability. The peak has not been seen yet,” says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

All 18 industries reported slower supplier deliveries in October, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Paper Products; Machinery; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Printing & Related Support Activities; Textile Mills; Transportation Equipment; Chemical Products; Wood Products; Petroleum & Coal Products; and Primary Metals. No industries reported faster supplier deliveries in October.

Inventories

The Inventories Index registered 57 percent in October, 1.4 percentage points higher than the 55.6 percent reported for September. “Manufacturing inventories continued to expand due to panelists’ companies stocking more raw materials in hopes of avoiding production shortages, as well as growth in work-in-process and finished-goods inventories,” said Fiore. An Inventories Index greater than 44.5 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The 14 industries reporting higher inventories in October — in the following order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Electrical Equipment, Appliances & Components; Furniture & Related Products; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Miscellaneous Manufacturing; Primary Metals; Chemical Products; and Fabricated Metal Products. The two industries reporting a decrease in inventories in October are Wood Products; and Nonmetallic Mineral Products.

Customers’ Inventories†

ISM®’s Customers’ Inventories Index registered 31.7 percent in October, the same reading from the 31.7 percent reported for September, indicating that customers’ inventory levels were considered too low. “Customers’ inventories are too low for the 61st consecutive month, a positive for future production growth. For 15 straight months, the Customers’ Inventories Index has been at historically low levels,” said Fiore.

No industries reported higher customers’ inventories in October. The 15 industries reporting customers’ inventories as too low during October — listed in order — are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Machinery; Wood Products; Textile Mills; Plastics & Rubber Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Chemical Products; Furniture & Related Products; Computer & Electronic Products; and Transportation Equipment.

Prices†

The ISM® Prices Index registered 85.7 percent, an increase of 4.5 percentage points compared to the September reading of 81.2 percent, indicating raw materials prices increased for the 17th consecutive month, at a faster rate in October. This is the 14th month in a row that the index has been above 60 percent and the 11th straight month it has exceeded 70 percent. “Aluminum, basic chemicals, copper, corrugate and packaging materials, electronic components, energy, some plastics and plastic products, freight, and steels continue to remain at elevated prices due to product scarcity,” said Fiore. A Prices Index above 52.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

In October, all 18 industries reported paying increased prices for raw materials, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; Textile Mills; Furniture & Related Products; Machinery; Petroleum & Coal Products; Chemical Products; Computer & Electronic Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Wood Products.

Backlog of Orders†

ISM’s Backlog of Orders Index registered 63.6 percent in October, a 1.2-percentage point decrease compared to the 64.8 percent reported in September, indicating order backlogs expanded for the 16th straight month. This is the ninth consecutive month with a reading above 60 percent. “Backlogs expanded at a lower rate in October compared to September, indicating production was able to keep up with continuing strong new order levels. However, backlogs remain at historically high levels. Of the six big industry sectors, five (Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Fabricated Metal Products; and Transportation Equipment) reported that backlogs expanded strongly,” said Fiore.

The 15 industries reporting growth in order backlogs in October, in the following order, are: Apparel, Leather & Allied Products; Textile Mills; Paper Products; Machinery; Furniture & Related Products; Wood Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Fabricated Metal Products; Plastics & Rubber Products; Primary Metals; and Transportation Equipment. The only industry reporting lower backlogs in October is Nonmetallic Mineral Products.

New Export Orders†

ISM’s New Export Orders Index registered 54.6 percent in October, up 1.2 percentage points compared to the September reading of 53.4 percent. “The New Export Orders Index grew for the 16th consecutive month, at a faster rate compared to September. Of the six big industry sectors, five (Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; and Transportation Equipment) expanded. New export orders were a contributor to the New Orders Index continuing in strong expansion territory,” said Fiore.

The 10 industries reporting growth in new export orders in October — in the following order — are: Furniture & Related Products; Paper Products; Primary Metals; Miscellaneous Manufacturing; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Chemical Products; and Transportation Equipment. The only industry reporting a decrease in new export orders in October is Plastics & Rubber Products.

Imports†

ISM®’s Imports Index registered 49.1 percent in October, a decrease of 5.8 percentage points compared to September’s figure of 54.9 percent. “Imports contracted in October after 15 consecutive months of expansion, reflecting continuing challenges with throughput at U.S. ports of entry. Overland-transport challenges and container shortages continue to persist across the global supply chain, causing instability with import level projections. Imports will continue to be challenged through the end of 2021 and likely through the first half of 2022,” says Fiore.

The five industries reporting growth in imports in October are: Textile Mills; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The eight industries reporting a decrease in imports in October — in the following order — are: Wood Products; Nonmetallic Mineral Products; Paper Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Computer & Electronic Products; and Machinery.

†The Supplier Deliveries, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders, and Imports indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures in October was 156 days, an increase of two days compared to September. Average lead times in October for both Production Materials and Maintenance, Repair and Operating (MRO) Supplies were the longest since ISM began collecting this data in 1987, breaking previous records set in September. Average lead time for Production Materials was 96 days, an increase of four days, and average lead time for MRO Supplies was 49 days, up four days compared to the previous month.

Posted November 1, 2021

Source: Institute for Supply Management® (ISM®)

W. CONSHOHOCKEN, Pa. — November 1, 2021 — ASTM International and Mexico’s national standards body, Dirección General de Normas (DGN), signed a Memorandum of Understanding (MoU) on Oct. 29. DGN, part of Mexico’s Ministry of Economy, coordinates the development of standards and regulations and promotes standardization use in Mexico.

Kathie Morgan, president, ASTM International, and Alfonso Guati Rojo Sánchez, general director of standards in Mexico’s Ministry of Economy, signed the MoU.

In her comments at the signing ceremony, Morgan said: “On behalf of ASTM International, I am honored and pleased to participate in this virtual ceremony for the signing of a Memorandum of Understanding between ASTM and DGN. It is yet another step in ASTM International’s work in Mexico and Latin America, which began in earnest when the late Luis Ordóñez became a member of the ASTM’s Board of Directors in the early 2000’s and ASTM held its very first international Board meeting in Mexico City in 2002.”

The new MoU serves as a cooperation agreement allowing ASTM to continue this ongoing outreach to Mexico, which remains focused on:

• Enhancing communications to build government and industry awareness of ASTM International as a trusted technical source of information that supports public health and safety, consumer confidence, trade, and the overall quality of life.
• Inviting Mexican stakeholder participation in the development of ASTM standards to share knowledge and exchange best practices to ensure that ASTM standards meet and support Mexico’s local and global needs, ranging from governments to industries to the people of Mexico.
• Encouraging collaboration on topics and issues of mutual interest.
• Promoting standards education and related ASTM activities for students and professors.

“To sign this MoU is for us a historical moment,” Guati remarked at the ceremony. “It’s very relevant in the evolution of the processes of implementation of the Quality Infrastructure in Mexico. It’s very important to set these kind of agreements in order to disseminate and share information and train ourselves in the best way possible on high quality standards that are prepared around the world to be able to improve our systems.

“I am convinced that the signing this agreement today is just the starting point so we can develop and benefit from each other,” Guati added. “Acknowledging all of the prior conversations that have made this MoU agreement a reality, the next phase is going to be the most exciting and interesting one, where each one of us will get this agreement going to maximize the benefits for the users, which will receive the best services out of this agreement.”

The meeting was attended by Jesús Cantú Escalante, Head of the Unit of Regulations, Competitiveness and Competition of the Ministry of Economy, who welcomed the participants and celebrated the adoption of the memorandum of understanding between DGN and ASTM International.

ASTM currently has almost 200 members from Mexico participating in the work of our technical committees as well as 45 companies participating in Proficiency Testing Programs. In addition, ASTM has more than 350 student members in Mexico, from 15 university campuses.

“Working together, ASTM, DGN, and developers of technical requirements in Mexico will be even better able to support innovation, competitiveness, sustainability, and climate resilience, through standards that reflect technical quality, market relevance, and suitability to the task at hand,” said Morgan. “The opportunity to help foster innovation, promote safety, and support economic growth in North America is a great opportunity for all of us.”

Posted November 1, 2021

Source: ASTM International