Business

Supply chain problems may be mitigated, ISM factory data suggests

Numbers: The closely tracked index of US-based manufacturers rose from 60.8% last month to 61.1% in November. The Supply Management Association said Wednesday. This was in line with the Economist’s predictions polled by The Wall Street Journal.

A number above 50% means growth. The index has exceeded that level for 18 consecutive months.

read: Consumer confidence hits nine-month lows due to inflation and Covid concerns

Big picture: Manufacturers — in fact most companies — are in a strange situation.

There is abundant demand from customers for new cars, home appliances, and personal computers. However, due to the large shortage of labor and supplies, companies cannot make enough products.

These bottlenecks have forced companies to pay more, causing the largest surge in US inflation in 31 years.

Until these shortfalls are alleviated, a full economic recovery and lower inflation are unlikely, but could continue until next year. The Federal Reserve is so worried that it has stopped calling inflation spikes “temporary.”

Important details: New orders and production increased in November. Both indexes exceeded 60%.

Employment also increased again, with gauges rising from 52% to 53.3%.

There was some evidence that supply bottlenecks were slightly mitigated as companies succeeded in reducing order backlogs and speeding up deliveries.

“The business is strong, but the lack of raw materials and labor makes it difficult to meet customer demand,” said a furniture manufacturer executive.

The ISM Index is created from a survey of executives ordering their raw materials and other supplies. Gauges tend to rise or fall in tandem with economic health.

What do economists say? “All of the survey’s supply chain measures were eased in November, but remain on the rise. Pantheon Economics Chief Economist Ian Shepherdson said all of these numbers peaked in the spring and are the worst of the supply chain crisis. It suggests that things are over.

Market reaction: Dow Jones Industrial Average
DJIA,
+ 1.09%

And S & P 500
SPX,
+ 1.51%

It rose in trading on Wednesday. Recently, stock prices have fallen from record highs due to concerns over coronavirus Omicron shares and a surge in inflation.

Supply chain problems may be mitigated, ISM factory data suggests

Source link Supply chain problems may be mitigated, ISM factory data suggests

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