© Nuttawut Uttamaharad/Dreamstime
Hot Rolled Steel Process Glowing Metals Nuttawut Uttamaharad Dreamstime 60b65dcdca5e0

Manufacturing in May Grows, Still Troubled by Supply Difficulties

June 1, 2021
Optimism is up among surveyed manufacturers after 12 solid months of growth.

According to the latest data from the Institute for Supply Management, expansion in manufacturing is still on the rise despite record-long lead times and wide-scale shortages of critical basic materials. The manufacturing sector as a whole has consistently grown each month since April 2020, a full year of expansion.

The ISM Purchasing Manager’s Index rose half a percentage point to 61.2% in May, growing at a faster rate last month than in April. The production index fell four points to 58.5%, indicating continued growth at a slower rate: like the main index, production has grown consistently since April of last year.

“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,” said Timothy Fiore, who chairs the ISM’s Manufacturing Business Survey Committee. At the same time, he said, optimism among survey respondents increased compared to April.

The index for new orders, which has also grown for the past 12 months, grew at a faster rate in May, advancing 2.7 points to 67.0%. At the same time, highlighting manufacturers’ difficulties with having those orders filled, the index for supplier deliveries rose 3.8 points to 78.8%. (While an index above 50% in most categories indicates growth, an index above 50% in supplier deliveries indicates that deliveries are slowing down.) The supplier deliveries index has been above 50% for the past 63 months, more than five years.

Executives surveyed by the ISM mostly noted difficulty with supply of both labor and materials. “Business is good, but labor and raw materials are becoming very problematic, driving increases in costs,” said a member of the furniture industry. An executive in food and beverages said the shortage of workers “is not only impacting our production, but suppliers’ as well: Spot shortages and delays are common due to an inability to staff lines.”

Manufacturing employment grew at a slightly slower rate than previously, according to the ISM report: their employment index fell 4.2 points to 50.9%, keeping it in growth territory for a sixth month running.

The ISM’s abnormally long lists of commodities up in price and in short supply corroborated comments on supply difficulties. Notable commodities include aluminum, which has been up in price for a year and in short supply for 2 months; copper, up in price for 12 months; lumber, up in price for 11 months and in short supply for three; and steel, up in price for 10 months and in short supply for six.

Commodities that are both up in price and in short supply as of last month are aluminum, aluminum products, coatings, corrugated boxes, electrical and electronic components, foam products, temporary labor, lumber, ocean freight, plastic containers and some plastic products, semiconductors, steel (including cold-rolled, hot-rolled, galvanized, stainless, bars, and products) and wooden pallets.

On inventory, manufacturer inventories have begun to grow, while customer inventories are still listed by the ISM as “too low,” where they have been for almost five years.

New export orders and imports both grew at a faster rate in May at a faster rate then previously. Both have grown each month for the past 11 months now.

About the Author

Ryan Secard | Associate Editor


Focus: Workforce and labor issues; machining and foundry management
LinkedIn: https://www.linkedin.com/in/ryan-secard/

Associate Editor Ryan Secard covers topics relevant to the manufacturing workforce, including recruitment, safety, labor organizations, and the skills gap. Ryan has written IndustryWeek's Salary Survey annually since 2021 and has coordinated its Talent Advisory Board since September 2023.

Ryan got started at IndustryWeek in August 2019 as an editorial intern and was hired as a news editor in 2020 before his 2023 promotion to associate editor, talent. He has a Bachelor of Arts in English from the College of Wooster.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!