TEMPE, Ariz. — August 2, 2021 — Economic activity in the manufacturing sector grew in July, with the overall economy notching a 14th 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 July Manufacturing PMI registered 59.5 percent, a decrease of 1.1 percentage points from the June reading of 60.6 percent. This figure indicates expansion in the overall economy for the 14th month in a row after contraction in April 2020. The New Orders Index registered 64.9 percent, decreasing 1.1 percentage points from the June reading of 66 percent. The Production Index registered 58.4 percent, a decrease of 2.4 percentage points compared to the June reading of 60.8 percent. The Prices Index registered 85.7 percent, down 6.4 percentage points compared to the June figure of 92.1 percent, which was the index’s highest reading since July 1979 (93.1 percent). The Backlog of Orders Index registered 65 percent, 0.5 percentage point higher than the June reading of 64.5 percent. The Employment Index registered 52.9 percent, 3 percentage points higher compared to the June reading of 49.9 percent. The Supplier Deliveries Index registered 72.5 percent, down 2.6 percentage points from the June figure of 75.1 percent. The Inventories Index registered 48.9 percent, 2.2 percentage points lower than the June reading of 51.1 percent. The New Export Orders Index registered 55.7 percent, a decrease of 0.5 percentage point compared to the June reading of 56.2 percent. The Imports Index registered 53.7 percent, a 7.3-percentage point decrease from the June reading of 61 percent.”

Fiore continues, “Business Survey Committee panelists reported that their companies and suppliers continue to struggle to meet increasing demand levels. As we enter the third quarter, all segments of the manufacturing economy are impacted by near record-long raw-material lead times, continued shortages of critical basic materials, rising commodities prices and difficulties in transporting products. Worker absenteeism, short-term shutdowns due to parts shortages and difficulties in filling open positions continue to be issues limiting manufacturing-growth potential. Optimistic panel sentiment remained strong, with 13 positive comments for every cautious comment. 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) improved in the period, posting a combined 0.6-percentage point increase to the Manufacturing PMI® calculation. The Employment Index returned to expansion after one month of contraction; panelists continued to note significant difficulties in attracting and retaining labor at their companies’ and suppliers’ facilities, although there were signs of improvement. Inputs — expressed as supplier deliveries, inventories, and imports — continued to support input-driven constraints to production expansion, at slower rates compared to June as the Supplier Deliveries Index softened while the Inventories Index contracted, likely due to long lead times. The Prices Index expanded for the 14th consecutive month, indicating continued supplier pricing power and scarcity of supply chain goods.

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

“Manufacturing performed well for the 14th straight month, with demand, consumption and inputs registering growth compared to June. Panelists’ companies and their supply chains continue to struggle to respond to strong demand due to difficulties in hiring and retaining direct labor. Comments indicate slight improvements in labor and supplier deliveries offset by continued problems in the transportation sector. High backlog levels, too low customers’ inventories and near record raw-materials lead times continue to be reported. Labor challenges across the entire value chain and transportation inefficiencies are the major obstacles to increasing growth,” says Fiore.

Seventeen of 18 manufacturing industries reported growth in July, in the following order: Furniture & Related Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Computer & Electronic Products; Nonmetallic Mineral Products; Machinery; Fabricated Metal Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Wood Products; and Petroleum & Coal Products. The only industry reporting a decrease in July compared to June was Textile Mills.

What Respondents Are Saying

“Business levels continue to exhibit strong demand, with no signs of backing down. Purchases continue to have long lead times due to shortages of raw materials and labor force, as well as logistics challenges. Increased costs are being passed to customers.” [Computer & Electronic Products]

“Supply chains are slowly, very slowly filling up. Like a water hose, starting upstream and slowly flowing downstream. Rumor is a full return to ‘normal’ may be nearer to year’s end, but the situation is progressing. Transportation (equipment and drivers) is the current pinch point, more so than material shortages.” [Chemical Products]

“Strong sales continue, and inventories are low as the chip shortage is keeping production numbers down — we have idled several of our assembly plants to reduce the strain on the chip supply base.” [Transportation Equipment]

“Still dealing with price increases from force majeure issues as well as overseas shipping premiums and higher costs of items like fuel. Customer demand still high; pushing plant to max production rates.” [Food, Beverage & Tobacco Products]

“Strong operations, (with) new programs, orders and launches. Continue to have hiring difficulties and are unable to fill production and salaried jobs (due to) a lack of candidates. Raw materials are still in short supply, with longer lead times.” [Fabricated Metal Products]

“Incoming bookings continue to be strong, and economy continues to return. Still struggling with inflation and availability (of materials, labor and freight).” [Furniture & Related Products]

“Sales are above last year by a good percentage, but meeting demand is just not possible due to force majeure situations, logistics, and labor shortages. We don’t anticipate this ending until well into 2022.” [Nonmetallic Mineral Products]

“Supply chain continues to be extremely challenging in a variety of categories. Having to place orders months ahead of time just to get a place in line.” [Machinery]

“Very busy with new orders. Material costs continue to rise, and supplies are sometimes delayed. Labor issues are still affecting us the most with finding proper labor. Labor— costs are increasing as we are competing locally for top talent.” [Miscellaneous Manufacturing]

“Business levels continue to be very strong, but we also continue to struggle finding employees. We can only fill 75 percent of our order requirements due to the labor shortage.” [Primary Metals]

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; Aluminum (14); Aluminum Products (4); Ammonia; Cable & Harnesses; Capacitors; Caustic Soda (2); Coatings (4); Copper (14); Corrugate (10); Corrugated Packaging (9); Crude Oil (2); Diesel Fuel (7); Electrical Components (8); Electrical Motors; Electronic Components (8); Ethylene; Freight (9); High-Density Polyethylene (HDPE) (7); Hydraulic Components; Labor — Temporary (3); Lumber* (13); Medium-Density Fiberboard (MDF); Natural Gas; Ocean Freight (8); Packaging Film; Packaging Supplies (8); Pallets; Paper Products; Phosphates; Plastic Resins (11); Polyethylene (6); Polyols; Polypropylene (13); Polyvinyl Chloride (PVC) Products (2); Printed Circuit Board Assemblies (PCBAs); Propylene; Resin-Based Products (6); Resins; Resistors; Semiconductors (6); Shipping Containers; Solvents; Steel (12); Steel — Carbon (8); Steel — Hot Rolled (11); Steel — Scrap (3); Steel — Stainless (9); Steel Products (11); Steel Wire; Sulfuric Acid; Totes; Wood (2); and Wood Products (2).

Commodities Down in Price

Copper; and Lumber*.

Commodities in Short Supply 


Adhesives & Paint; Aluminum (4); Aluminum Products (3); Capacitors; Chlorine; Corrugate (2); Corrugated Packaging; Electrical Components (10); Electronic Components (8); Freight; Hardware; Hydraulic Components; Labor — Temporary (3); Lumber; Nylon Polymer; Ocean Freight (4); Packaging Supplies (2); Paper (2); Phosphates; Plastic Products (6); Plastic Resins — Other (5); Polyols; Polyvinyl Chloride (PVC) Resin (3); Personal Protective Equipment (PPE) — Gloves; Resistors; Semiconductors (8); Steel (8); Steel — Carbon; Steel — Cold Rolled (3); Steel — Hot Rolled (9); Steel — Stainless (5); Steel Drums; Steel Products (6); Steel Wire; Totes; and Wood — Pallets (4).

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates those commodities reported both up and down in price.

July 2021 Manufacturing Index Summaries

Manufacturing PMI®

Manufacturing grew in July, as the Manufacturing PMI® registered 59.5 percent, 1.1 percentage points lower than the June reading of 60.6 percent. “The Manufacturing PMI continued to indicate strong sector expansion and U.S. economic growth in July. Four out of 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; Chemical Products; Food, Beverage & Tobacco 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 sustained levels of increasing demand. Nine out of 10 subindexes were positive for the period; a reading of ‘too low’ for Customers’ Inventories Index is considered a positive for future production,” says 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 July Manufacturing PM® indicates the overall economy grew in July for the 14th consecutive month following contraction in April 2020. “The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for July (59.5 percent) corresponds to a 4.7-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.

THE LAST 12 MONTHS

New Orders

ISM’s New Orders Index registered 64.9 percent in July, down 1.1 percentage points compared to the 66 percent reported in June. This indicates that new orders grew for the 14th consecutive month. “All of the six largest manufacturing sectors — Computer & Electronic Products; Chemical Products; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; and Petroleum & Coal Products, in that order — expanded at strong levels. This is the 13th consecutive month of index readings of above 60, nearly matching a 14-month streak during the last manufacturing expansion, which began in 2016,” 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).

Of the 18 manufacturing industries, the 15 that reported growth in new orders in July — in the following order — are: Furniture & Related Products; Computer & Electronic Products; Printing & Related Support Activities; Machinery; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; Chemical Products; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Primary Metals. The only industry reporting a decline in new orders in July is Textile Mills.

Production

The Production Index registered 58.4 percent in July, 2.4 percentage points lower than the June reading of 60.8 percent, indicating growth for the 14th consecutive month. “All of the top six industries — Chemical Products; Petroleum & Coal Products; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Fabricated Metal Products, in that order — expanded at strong levels. Lack of direct labor and raw materials continued to be constraints to production growth, but less so compared to June,” says 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 16 industries reporting growth in production during the month of July — listed in order — are: Printing & Related Support Activities; Chemical Products; Wood Products; Furniture & Related Products; Primary Metals; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Nonmetallic Mineral Products; Transportation Equipment; Paper Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; Machinery; and Plastics & Rubber Products. The only industry reporting decreased production in July is Textile Mills.

Employment

ISM’s Employment Index registered 52.9 percent in July, 3 percentage points higher than the June reading of 49.9 percent. “The Employment Index returned to expansionary territory after dipping below 50 percent. Of the six big manufacturing sectors, four (Computer & Electronic Products; Fabricated Metal Products; Transportation Equipment; and Food, Beverage & Tobacco Products) expanded. Strong new-order levels, low customers’ inventories and expanding backlogs continue to support employment strength; however, survey panelists’ companies are still struggling to meet labor-management plans but less so compared to prior months. An overwhelming majority of panelists indicate their companies are hiring or attempting to hire, with about 30 percent of comments — a slight decrease from previous months — expressing difficulty in filling positions. A significant number of panelists note increasing employee-turnover rates,” 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 the 18 manufacturing industries, the 11 industries reporting employment growth in July — in the following order — are: Furniture & Related Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Machinery; Nonmetallic Mineral Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Primary Metals; Transportation Equipment; and Food, Beverage & Tobacco Products. The four industries reporting a decrease in employment in July are: Textile Mills; Wood Products; Plastics & Rubber Products; and Chemical Products.

Supplier Deliveries†

The delivery performance of suppliers to manufacturing organizations was slower in July, as the Supplier Deliveries Index registered 72.5 percent, 2.6 percentage points lower than the 75.1 percent reported in June and the second straight month of slowing expansion. All six (Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Petroleum & Coal Products) of the top manufacturing industries reported slowing deliveries. “Deliveries slowed at a slower rate compared to the previous month, but the index continues to reflect difficulties suppliers are experiencing in meeting customer demand, including (1) ongoing hiring challenges, (2) product shortages, extended raw-materials lead times and stubbornly high prices, and (3) inconsistent transportation availability,” 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 July, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Paper Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Fabricated Metal Products; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Textile Mills; Wood Products; Electrical Equipment, Appliances & Components; Primary Metals; and Petroleum & Coal Products.

Inventories

The Inventories Index registered 48.9 percent in July, 2.2 percentage points lower than the 51.1 percent reported for June, reversing two months of expansion. “Inventories remain unstable due to ongoing supplier constraints, as demonstrated by the index returning to contraction. In July, supplier delivery rates were not able to keep up with production levels, causing a draw down in inventory levels. Panelists’ companies are continuing to call for more materials from their suppliers than they are able to deliver,” says 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 10 industries reporting higher inventories in July — in the following order — are: Apparel, Leather & Allied Products; Textile Mills; Furniture & Related Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Computer & Electronic Products; and Chemical Products. The four industries reporting a decrease in inventories in July are: Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Machinery.

Customers’ Inventories†

ISM®’s Customers’ Inventories Index registered 25 percent in July, 5.8 percentage points lower than the 30.8 percent reported for June, indicating that customers’ inventory levels were considered too low. The July reading is the lowest since the index was established in January 1997. “Customers’ inventories are too low for the 58th consecutive month, a positive for future production growth. For 12 straight months, the Customers’ Inventories Index has been at historically low levels,” says Fiore.

The only industry reporting higher customers’ inventories in July is Apparel, Leather & Allied Products. The 15 industries reporting customers’ inventories as too low during July — listed in order — are: Petroleum & Coal Products; Primary Metals; Paper Products; Wood Products; Transportation Equipment; Fabricated Metal Products; Textile Mills; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Chemical Products; Furniture & Related Products; and Food, Beverage & Tobacco Products.

Prices†

The ISM® Prices Index registered 85.7 percent, a decrease of 6.4 percentage points compared to the June reading of 92.1 percent, indicating raw-materials prices increased for the 14th consecutive month but at slower levels. This is the index’s seventh straight month above 80 percent. “Aluminum, basic chemicals, packaging supplies, electrical and electronic components, energy, some plastics and plastic products, freight and steels continue to remain at elevated prices due to some product scarcity, but supply and demand dynamics appear to be moving closer to equilibrium for the first time in many months,” says 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 July, all 18 industries reported paying increased prices for raw materials, in the following order: Apparel, Leather & Allied Products; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Transportation Equipment; Computer & Electronic Products; Textile Mills; Chemical Products; Food, Beverage & Tobacco Products; and Wood Products.

Backlog of Orders†

ISM®’s Backlog of Orders Index registered 65 percent in July, a 0.5-percentage point increase compared to the 64.5 percent reported in June, indicating order backlogs expanded for the 13th straight month. “Backlogs expanded at similar rates in July compared to June, indicating production was able to maintain the level of backlog growth even with continuing strong new order levels. Five (Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; Chemical Products; and Food, Beverage & Tobacco Products) of the six big industry sectors reported that backlogs expanded strongly,” says Fiore.

The 15 industries reporting growth in order backlogs in July, in the following order, are: Apparel, Leather & Allied Products; Furniture & Related Products; Plastics & Rubber Products; Paper Products; Computer & Electronic Products; Transportation Equipment; Machinery; Fabricated Metal Products; Textile Mills; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Chemical Products; Primary Metals; and Food, Beverage & Tobacco Products. No industry reported lower backlogs in July compared to June.

New Export Orders†

ISM®’s New Export Orders Index registered 55.7 percent in July, down 0.5 percentage point compared to the June reading of 56.2 percent. “The New Export Orders Index grew for the 13th consecutive month, but at a slightly slower rate. Of the six big industry sectors, five (Transportation Equipment; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products) expanded. New export orders were again a positive factor to the growth in the New Orders Index. Export levels remain sluggish compared to the strong export activity experienced in the first quarter of 2018, when the index averaged 60.4 percent,” says Fiore.

The 11 industries reporting growth in new export orders in July — in the following order — are: Furniture & Related Products; Nonmetallic Mineral Products; Primary Metals; Miscellaneous Manufacturing; Paper Products; Transportation Equipment; Computer & Electronic Products; Machinery; Chemical Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The two industries reporting a decrease in new export orders in July are: Wood Products; and Plastics & Rubber Products.

Imports†

ISM®’s Imports Index registered 53.7 percent in July, a decrease of 7.3 percentage points compared to the 61 percent reported for June. “Imports expanded for the 13th consecutive month, at a significantly slower rate compared to June, 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 major stability issues with respect to predictable import levels. Imports will continue to be challenged through the fourth quarter of 2021,” says Fiore.

The seven industries reporting growth in imports in July — in the following order — are: Nonmetallic Mineral Products; Paper Products; Machinery; Computer & Electronic Products; Chemical Products; Transportation Equipment; and Food, Beverage & Tobacco Products. The three industries reporting a decrease in imports in July are: Furniture & Related Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. Eight industries reported no change in July compared to June.

†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 increased in July by four days to 148 days. Average lead time for production materials in July was 86 days, down two days from the June figure of 88 days, the highest since ISM® began collecting this data in 1987. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased in July by three days to 42 days.

Posted August 2, 2021

Source: Institute for Supply Management

MILAN — August 2, 2021 — The index of orders intake for Italian textile machinery, as processed by ACIMIT, the Association of Italian textile machinery manufacturers, for the period ranging from April-June 2021, was up 214 percent compared to the same 2020 period. The value of the index was attested at 150.7 points (basis: 2015 = 100), a result that was no doubt influenced by the comparison with a quarter, from April-June 2020, in which orders were obviously at a minimum, due to the Covid-19 pandemic.

An analysis of the index of orders intake for the first six months of 2021 confirms a clearly positive business dynamic for Italian manufacturers. An overall growth rate of 122 percent compared to the first half of 2020 regarded both the domestic and export markets.

Alessandro Zucchi, president di ACIMIT, commented: “The data are certainly positive, bearing witness to a renewed climate of confidence.” On the domestic market, in addition to a physiological rebound following the collapse in 2020, the boost generated by 4.0 incentives is being felt. “The push towards digitalization in the business sector,” adds Zucchi, “is being perceived as creating a competitive edge for the entire textile industry, especially here in Italy.”

In spite of these encouraging signals, a sense of uncertainty persists nonetheless on the actual solidity of this recovery. “There is no lack of obstacles facing our machinery producers during this phase,” Zucchi said. “The sharp rise in the price of raw materials does not seem to be stopping, to which we can add the limited availability of components, making it difficult for our manufacturers to fulfill the many orders they’ve received. Finally, the limitations imposed on the business travels of our staff persist, above all qualified assembly technicians.” These are all issues that affect the sector’s order forecasts for the third quarter of 2021. To this end, ACIMIT’s survey have revealed a substantial stability compared to the previous three months for domestic orders (as expressed by 59 percent of companies), and a prevailing caution also abroad, where forecasts of stable or decreasing orders make up 74 percent of the answers given by Italian companies in the sector.

Posted August 2, 2021

Source: ACIMIT: The Association of Italian Textile Machinery Manufacturers