Supply-Chain Issues, Labor, Weigh on PMI

The purchasing manager’s index (PMI), also known as the ISM manufacturing index, is a key indicator that provides a monthly measure of U.S. economic activity, based on a survey of purchasing managers at more than 300 manufacturing firms.

While still showing strong growth, the index of manufacturing activity fell slightly in June from May. The print was 60.6—which is still above the 50 needed to signal expansion. Supply-chain issues were evident as the index of delivery times showed a lengthening of wait times for parts and materials, with a majority of manufacturing industries reporting slower deliveries. Commodities that were in short supply last month ranged from from caustic soda to cold-rolled steel.

Other key metrics were mixed in June. New orders fell 1%, to 66, growing at a slower rate, for the 13th consecutive month. Showing how clearly labour is being affected by the pandemic and related stimulus, the Employment Index dropped, dipping into contraction territory after months of expansion. And order backlogs continued.

The events of the past year continue to have an impact on all areas of the economy. For how long will the high demand, supply constraints and lack of labor all continue to weigh on the manufacturing sector?