U.S. Factory Activity Expanded Strongly in November; Supply-Chain Strains Eased Modestly -- ISM

12/01/2021 | 10:45am

By Xavier Fontdegloria

Factory activity across the U.S. kept bustling in November on strong demand, with firms reporting tentative signs that supply-side constraints eased somewhat, according to a survey of purchasing managers released Wednesday.

The ISM Manufacturing Report on Business PMI rose to 61.1 in November from 60.8 in October, data from the Institute for Supply Management show. The reading came in line with the consensus forecast from economists polled by The Wall Street Journal.

The index suggests that the U.S. manufacturing sector grew at a solid rate in November as it stood well above the 50.0 point that separates expansion from contraction. It also indicates a slight acceleration of factory activity compared with the previous month.

"The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.

Demand for goods was strong, according to the data. The new orders index increased to 61.5 from 59.8 the previous month, the customers' inventories index fell to 25.1 from 31.7, and the backlog of orders index fell slightly to 61.9 from 63.6.

The production index rose to 61.5 in November from 59.3 the previous month, while the employment index edged up to 53.3 from 52.0.

"Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labor turnover at all tiers," Mr. Fiore said.

The supplier deliveries index softened to 72.2 from 75.6, indicating that supplier delivery rates are improving. The inventories index was broadly stable at 56.8.

Still, transportation networks, a harbinger of future supplier delivery performance, are still performing erratically, Mr. Fiore said.

The prices index declined to 82.4 from 85.7 in October, but remained at historically high levels.

Comments from respondents to the survey reported widespread delivery delays, but signaled that these have started to ease or are no longer getting worse.

"We are still seeing shortages with various metals. Plastic resins seem to be slowly improving," said one respondent from the electrical equipment sector.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

12-01-21 1044ET

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