Manufacturers struggle to deliver goods in November

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Manufacturers struggle to deliver goods in November

WASHINGTON Reuters - Manufacturing activity picked up in November due to strong demand for goods, keeping inflation high as factories struggled with pandemic-related shortages of raw materials.

The Institute for Supply Management ISM said on Wednesday its index of factory activity increased to 61.1 last month from 60.8 in October.

A reading above 50 indicates an expansion in manufacturing, which accounts for 12% of the U.S. economy. Economists polled by Reuters had predicted that the index would rise to 61.0.

The simultaneous recovery from the COVID 19 epidemic has left factories waiting longer to receive raw materials due to strained supply chains, fueled by trillions of dollars in relief money from governments.

In October, the ISM survey's supplier deliveries fell to a reading of 72.2 from 75.6. A reading above 50% indicates slower deliveries.

The long delivery times kept inflation at the factory gate bubbling. The manufacturers' price index fell to a high of 82.4 from a reading of 85.7 in October.

There isn't yet a sign of resistance, but the factories are easily passing the increased production costs to consumers.

Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that the risk of higher inflation has increased, and that the U.S. central bank should consider accelerating its pace of winding down its large-scale bond purchases at its next policy meeting in two weeks.

The Fed preferred inflation measure surged by the most in nearly 31 years on an annual basis in October.

The ISM survey's forward-looking new orders sub-index climbed to 61.5 last month from 59.8 in October. Customer inventories were depressed.

More workers were hired with demand strong. Manufacturing employment rose to a seven-month high. This, coupled with consumers' robust perceptions of the labor market last month, suggests that job growth accelerated further in November.

The constraints of work are attributed to the fact that there is a shortage of workers. There were 10.4 million unfilled jobs at the end of September. The Labor Department is expected to publish its closely watched November employment report on Friday.