PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Purchasing Managers Point to Continued Growth

By at 4 September, 2021, 9:43 am

 

by Raymond J. Keating –

According to purchasing and supply managers, the economy continued to expand in August. The Institute for Supply Management’s monthly surveys indicated that the economy grew for the 15th month in a row.

At the same time, the two surveys pointed to ongoing challenges in keeping up with demand given supply chain and labor issues, as well as uncertainty about a resurgence in COVID-19 cases. Prices were still elevated, but cooling some.

The Manufacturing ISM registered 59.9 percent in August, up by 0.4 percentage point from July. Timothy R. Fiore, chairman of the ISM Manufacturing Business Survey Committee, highlighted assorted caveats: “Business Survey Committee panelists reported that their companies and suppliers continue to struggle at unprecedented levels to meet increasing demand. All segments of the manufacturing economy are impacted by record-long raw-materials lead times, continued shortages of critical basic materials, rising commodities prices and difficulties in transporting products. The new surges of COVID-19 are adding to pandemic-related issues — worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems — that continue to limit manufacturing-growth potential. However, optimistic panel sentiment remained strong, with eight positive comments for every cautious comment.”

Similar sentiments were evident in the Services ISM report. The Services ISM actually was down from July – 61.7 percent in August versus 64.1 percent in July – but the July level was an all-time high.

Anthony Nieves, chairman of the ISM Services Business Survey Committee, noted, “There was a pullback in the rate of expansion in the month of August; however, growth remains strong for the services sector. The tight labor market, materials shortages, inflation and logistics issues continue to cause capacity constraints.”

Overall, these survey of purchasing managers in both the manufacturing and service sectors confirm the overarching story on the economy – growth continues but with significant restraints and challenges.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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