TEMPE, Ariz. – Despite supply chain delays and labor issues, furniture was the second-fastest growth industry of the top 15 manufacturing industries tracked by the Institute for Supply Management.
Furniture and its related products were only beat by the apparel, leather and allied products industries. Furniture also saw growth in new orders in December (2), growth in production (1), slower supplier deliveries in December (4), and, higher inventories (5).
As one respondent from the Furniture & Related Products sector put it, "Business continues to be good, with strong incoming orders from customers. Continue to battle labor, material and transportation pressures."
Overall, the economic activity in the manufacturing sector grew in December, with the overall economy achieving a 19th consecutive month of growth, according to the nation's supply executives in the latest Manufacturing ISM Report On Business.
"The December Manufacturing PMI registered 58.7 percent, a decrease of 2.4 percentage points from the November reading of 61.1 percent,” said Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. “This figure indicates expansion in the overall economy for the 19th month in a row after a contraction in April 2020.”
- The New Orders Index registered 60.4 percent, down 1.1 percentage points compared to the November reading of 61.5 percent.
- The Production Index registered 59.2 percent, a decrease of 2.3 percentage points compared to the November reading of 61.5 percent.
- The Prices Index registered 68.2 percent, down 14.2 percentage points compared to the November figure of 82.4 percent.
- The Backlog of Orders Index registered 62.8 percent, 0.9 percentage points higher than the November reading of 61.9 percent.
- The Employment Index registered 54.2 percent, 0.9 percentage points higher compared to the November reading of 53.3 percent.
- The Supplier Deliveries Index registered 64.9 percent, down 7.3 percentage points from the November figure of 72.2 percent.
- The Inventories Index registered 54.7 percent, 2.1 percentage points lower than the November reading of 56.8 percent.
- The New Export Orders Index registered 53.6 percent, a decrease of 0.4 percentage points compared to the November reading of 54 percent.
- The Imports Index registered 53.8 percent, a 1.2-percentage point increase from the November reading of 52.6 percent.
"The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with indications of improvements in labor resources and supplier delivery performance,” said Fiore. “Shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption. Coronavirus pandemic-related global issues — worker absenteeism, short-term shutdowns due to parts shortages, employee turnover and overseas supply chain problems — continue to impact manufacturing. However, panel sentiment remains strongly optimistic, with six positive growth comments for every cautious comment, down slightly from November.”
Still, the forecast released this month indicates a strong 2022 performance expectation in terms of revenue growth and profitability. Manufacturing performed well for the 19th straight month, with demand and consumption registering month-over-month growth. Meeting demand will remain a challenge, due to hiring difficulties and a clear cycle of labor turnover at all tiers. For the second month in a row,
Business Survey Committee panelists' comments suggest month-over-month improvement on hiring, offset by backfilling required to address employee turnover. Supplier delivery rate improvement was indicated by the Supplier Deliveries Index softening in December. Transportation networks, a harbinger of future supplier delivery performance, are still performing erratically; however, there are signs of improvement," says Fiore.
The 15 manufacturing industries reporting growth in December — in the following order — are Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Primary Metals; and Petroleum & Coal Products. The three industries reporting a decrease in December compared to November are Wood Products; Printing & Related Support Activities; and Paper Products.
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