US factories see no relief from supply issues

WASHINGTON — US manufacturers continued to recover from the COVID-19 pandemic in the first month of 2022, but there were few improvements in the supply issues plaguing them, an industry survey said on Tuesday.

The Institute for Supply Management (ISM) reported its manufacturing index slipped to 57.6 per cent in January, a decrease of just over a percentage point from December but nonetheless higher than analysts had forecast.

While the survey showed employment, supplier delivery times and order backlog situations improved slightly, price increases resumed while production and new orders fell.

"The US manufacturing sector remains in a demand-driven, supply chain-constrained environment, but January was the third straight month with indications of improvements in labour resources and supplier delivery performance," Survey Chair Timothy Fiore said. 

"Still, there were shortages of critical intermediate materials, difficulties in transporting products and lack of direct labour on factory floors due to the COVID-19 omicron variant."

The manufacturing index remained above the 50 per cent threshold indicating continued expansion, and all industries reported growth last month with the exception of paper products.

"Bookings continue to increase as we are still dealing with a shortage of labour and supply chain issues," a furniture and related products company told the survey, expressing a sentiment shared by many other businesses.

New orders dropped more than three percentage points to 57.9 per cent and production fell more than a point-and-a-half to 57.8 per cent.

Employment climbed slightly to 54.5 per cent, while there was a slight improvement in supplier delivery times, and the order backlog fell more than six points to 56.4 per cent.

Prices climbed nearly eight points to 76.1 per cent, after a sharp drop the month before.

Rubeela Farooqi of High Frequency Economics said the report indicates "positive but slowing momentum in the sector last month," and noted "Order backlogs and low inventories are supportive of manufacturing activity."

"However, supply bottlenecks and shortages, especially elevated absenteeism owing to Omicron, are likely headwinds going forward," she said.