Business of Engineering

Manufacturing industry records growth for eighth straight month

January manufacturing index slides a bit from December to 58.7%, but industry still showing strength.

By Chris Vavra February 1, 2021
Courtesy: CFE Media and Technology

The manufacturing industry continues to show strength and durability after a rough start to 2020 due to the COVID-19 pandemic. Economic activity in the manufacturing sector grew in January, with the overall economy notching an eighth consecutive month of growth as the ISM’s purchasing manufacturers’ index (PMI) registered 58.7%. This is almost two percentage points down from December, but new orders, production and employment are growing

Timothy R. Fiore, chair of the Institute for Supply Management, said in a press release: “The manufacturing economy continued its recovery in January. Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential.”

Five of the six biggest manufacturing industries — chemical products; fabricated metal products; transportation equipment; food, beverage & tobacco products; and computer & electronic products — registered moderate to strong growth in January. Sixteen of the 18 manufacturing industries overall recorded growth.

“Manufacturing performed well for the eighth straight month, with demand, consumption and inputs registering strong growth compared to December. Labor market difficulties at panelists’ companies and their suppliers will continue to restrict the manufacturing economy expansion until the coronavirus (COVID-19) crisis abates,” Fiore said.

What respondents are saying

  • “Supplier factory capacity is well utilized. Increased demand, labor constraints and upstream supply delays are pushing lead times. This is more prevalent with international than U.S.-based suppliers.” (Computer & electronic products)
  • “Business remains strong. Manufacturing running at full capacity.” (Chemical products)
  • “Very strong demand with limitations in supply to meet increased demand.” (Transportation equipment)
  • “Labor continues to be one of our largest challenges.” (Food, beverage & tobacco products)
  • “Our current business demand is going way past pre-COVID-19 [levels].” (Fabricated metal products)
  • “Business is very good. Customer inventories are low, with a significant order backlog through April. Supply base is struggling to keep up with demand, disrupting our production here and there. Raw material lead times have been extended. COVID-19 continues to cause challenges throughout the supply chain. Huge logistics challenges, especially in getting product through ports and in getting containers. We are seeing significant cost increases in logistics and raw materials.” (Machinery)
  • “We have had an increase in employees testing positive for COVID-19, negatively impacting manufacturing.” (Miscellaneous Manufacturing)
  • “2020 growth at 5 percent during a very challenging and volatile year. 2021 is expected to bring growth at a 7-percent or even greater pace. Logistics is the critical concern, but we are currently abating risk.” (Electrical equipment, appliances & components)
  • “January 2021 started with strong orders for plastic components in auto, electrical and other sectors. The industry outlook is optimistic. Looking at investing in new equipment for anticipated demand later this year. Reshoring is taking hold, with new customer potential.” (Plastics & rubber products)
  • “Business is improving, but we are still struggling with a shortage of available labor.” (Primary metals)

Chris Vavra
Author Bio: Chris Vavra is the web content manager for CFE Media.