In November, a measure of the U.S. manufacturing advanced as new orders accelerated and factories ramped up production and hiring.
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The Institute for Supply Management's gauge of factory activity went to 61.1 - in line with expectations, compared to 60.8 a month earlier, according to data released Wednesday. The reading above 50 indicates that manufacturing is expanding.
The group's measure of factory production jumped to a seven-month high and new orders accelerated, underscoring how resilient consumer demand for goods and solid business investment have underpinned the manufacturing recovery.
Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, said in a statement that the U.S. manufacturing sector remains in a supply chain constrained environment, with some indications of slight labor and supplier delivery improvement.
Fiore said that all segments of the manufacturing economy are affected by record-long raw materials and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products.
The average lead time for materials used in the production process was 96 days. The average lead time for capital equipment is now 160 days, the most since 1989.
The average lead time for supplies used for maintenance, repairs and operations climbed to 49 days, a record.
The ISM figures are consistent with separate data showing firmer manufacturing results in Europe and China. Despite improvements at euro-area and Chinese factories last month, input shortages, high prices and supply-chain woes remain headwinds for producers.
The ISM's U.S. employment gauge rose to a seven-month high, suggesting the pace of factory hiring picked up last month. The sector has made steady progress toward restoring to pre-pandemic employment levels, but it has faced similar hiring challenges as other industries in attracting and retaining talent.
The jobs report on Friday shows manufacturers added 42,000 workers in November, up from 60,000 in October. In all industries, there are more than half a million jobs that are expected to be added.
In the past few years, factories struggle with materials shortages, high input prices and transportation bottlenecks. A gauge of supplier deliveries, although somewhat improved last month, remains extremely elevated.
In November, thirteen manufacturing industries reported growth, led by apparel, furniture, and electrical equipment and appliances.
International component shortages cause delays in completing customer orders. Backlog continues to increase. Computer Electronic Products
All input costs are going up significantly, across the board. The shortage of raw materials and labor makes it hard to meet customer demand. We are still seeing shortages with various metals. Plastic resins seem to be improving slowly. Electronic component lead times are still moving out. Electrical Equipment Appliances
The biggest challenge we have at the moment is finding qualified workers, while steel plate and hot-rolled coil pricing seems to be approaching a plateau. - Fabricated metals
There are signs of improvement. Order backlogs fell to its lowest level since the beginning of the year, indicating that backlogs are growing at a slower pace. The group's prices paid index declined for the first time in three months, a trend that could continue if crude oil prices decline further.
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