Manufacturing is on a roll, but labor, some supplies run short
Manufacturing is on a roll, but labor, some supplies run short
Several reports show U.S. manufacturing’s on a roll, including data from the Institute for Supply Management and from IHS Markit’s purchasing managers index. Home construction and auto sales have the factories going. All that demand for manufactured goods is starting to create bottlenecks in production.
Manufacturing employment still hasn’t quite caught up to pre-pandemic levels, but as the economy emerges from pandemic lockdowns and demand ramps up for manufactured goods like cars and appliances, “manufacturers are certainly well ahead of most other industries when it comes to the recovery,” said Dave Gilbertson at payroll processor UKG. (Full disclosure: UKG is a Marketplace underwriter.)
Gilbertson said employers report it’s getting harder to find skilled labor.
Meanwhile, economist Ben Ayers at Nationwide said shortages are developing for materials like lumber, steel and semiconductors as producers try to increase output amid tight COVID restrictions.
Ayers said that with demand up and supply constrained, prices are rising.
“It’s just this weird transition from COVID to post-COVID, and one of the near-term impacts is likely to be a little bit of a pop in inflation,” Ayers said.
Ayers predicts that pop will only last six to eight months, and prices will moderate as supply and demand come into balance.
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