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US factories again overcome supply snarls to grow in September

·2-min read
US factories are bouncing back from the pandemic even as they struggle with supply chain issues (AFP/Andrew CABALLERO-REYNOLDS)

Supply shortages and delays continued to complicate operations at US factories but manufacturing nonetheless grew in September, an industry survey said Friday.

The Institute for Supply Management reported its manufacturing index was at 61.1 percent last month, higher than analysts had expected and for the 16th straight month above the 50-percent threshold indicating growth.

Employment climbed 1.2 percentage points to return to growth at 50.2 percent, however new orders were flat at 66.7 percent and production fell slightly to 59.4 percent, while supplier deliveries slowed.

"Manufacturing performed well for the 16th straight month, with demand, consumption and inputs registering month-over-month growth, in spite of continuing unprecedented obstacles and ever-increasing demand," the survey's chair Timothy Fiore said.

Those obstacles include "record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products," though he noted the survey received three positive comments for each cautious one, indicating optimism.

"Customer demand continues to swell as we prepare for the fourth quarter, and overall growth has been extremely good for the year. Supply chain concerns are growing beyond electronics and chips into most other commodities," an electrical equipment, appliances and components firm told the survey.

All manufacturing sectors reported growth last month, with the exception of wood products, which saw activity decrease.

Oren Klachkin of Oxford Economics warned in an analysis that the "the expansion's best days are in the rear-view mirror" and "supply chain headwinds look set to drag on growth well into next year."

"A monumental backlog of orders -- driven by robust demand and inventory restocking and stronger overseas demand -- will keep manufacturing humming into 2022," he added.

Prices jumped nearly two percentage points to 81.2 percent amid shortages of components.

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