Economy
Supply Executives Report Strong Demand in April
Written by Sandy Williams
May 1, 2018
Supply executives report that new orders, production and employment are growing, according to the latest survey by the Institute for Supply Management.
The April PMI in the ISM Report on Business registered 57.3, a two-point decline from March. Most of the components of the PMI registered a decrease in percentage points from March, but were still well above a reading of 50 that indicates growth. Demand remains strong, said suppliers.
The prices index rose 1.2 points to 79.3, its highest level since April 2011 when it registered 82.6 percent. Prices increased in 17 of 18 industry sectors.
Customer inventories remained at low levels and backlogs continued to expand. “Suppliers were not able to maintain desired inventory expansion levels consistent with production demands for the second straight month. Broad supplier lead-time extensions and freight uncertainties will continue to impact inventory accounts,” says ISM Chair Timothy Fiore. Customer inventories were perceived as too low.
“Inputs, expressed as supplier deliveries, inventories and imports, declined overall, due primarily to inventory reductions likely led by supplier performance restrictions,” said Fiore. “Lead time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue.”
“Demand remains robust, but the nation’s employment resources and supply chains continue to struggle,” added Fiore.
Survey respondents had the following comments:
• “Business is off the charts. This is causing many collateral issues: a tightening supply chain market and longer lead times. Subcontractors are trading capacity up, leading to a bidding war for the marginal capacity. Labor remains tight and getting tighter.” (Transportation Equipment)
• “The recent steel tariffs have made it difficult to source material, and we have had to eliminate two products due to availability and cost of raw material.” (Fabricated Metal Products)
• “Demand is up for products. Commodity pricing for steel and other materials increased due to the proposed tariffs. We are seeing commodity futures coming down. A lot of suppliers are asking for increases, and the team is battling those requests.” (Machinery)
• “[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.” (Miscellaneous Manufacturing)
• “Business conditions have been good; order book is full and running around 98 percent capacity.” (Primary Metals)
• “Backorders remain strong. New order rate exceeds shipment rate.” (Computer & Electronic Products)
Sandy Williams
Read more from Sandy WilliamsLatest in Economy
Chicago PMI decreases 4.1 points in May
The Chicago Business Barometer reports that decreases in new orders, order backlogs, and softer production pulled the index down by 4.1-points to 40.5, in May.
Architecture firms struggle through April
For the third month in a row, architecture firms reported a reduction in billings through April, according to the latest Architecture Billings Index release.
House committee blocks GOP budget proposal
The budget proposal has big implications for steel and manufacturing.
Manufacturing in New York state contracts again in May
Manufacturing activity in New York state declined for the third consecutive month, according to the May Empire State Manufacturing Survey from the Federal Reserve Bank of New York. Responding firms continue to forecast weaker business conditions in the coming months.
Chicago Business Barometer falls back in April, remains in contraction
The Chicago Business Barometer declined in April, reversing March’s gains, according to Market News International (MNI) and the Institute for Supply Management (ISM).