Numbers Up, Sentiment Down in February 2021 Manufacturing ISM® Report On Business®

The February 2021 Manufacturing ISM® Report On Business® is out and on the surface, it’s another bang-up month for industry. Everything is trending in the right direction and benchmarks remain stable to indicate a post-pandemic recovery that’s going smoothly. But under the sheen of these great numbers, sentiments from industry executives are less than rosy. In fact, they’re downright sour. The numbers may be hitting long-time highs, but opinions from various sectors are cautious at best, pessimistic at worst.

A glimpse at the February numbers

The overall PMI rose slightly in February to 60.8, up from 58.7 in January. This matches the previous high exactly three years ago in February 2018, which was the highest registered manufacturing PMI since May 2004!

The bump in February’s PMI shows rising numbers across the board. New orders are up 3.7 points, alongside supplier deliveries which are up 3.8 points, signaling business like clockwork. Production is up 2.5 points, as are new exports (2.3 points) and the growing order backlog (4.3 points). The only benchmarks to lose ground were inventories, customers’ inventories, and exports — which each fell negligibly.

On paper, this is nine solid months of recovery for manufacturing. That said, manufacturing could hit resistance in the near future.

Industry sentiments are struggling to find positivity

Despite the great numbers reflected in the February 2021 Manufacturing ISM® Report On Business®, industry executives aren’t so keen. The reason, according to many surveyed in the report, rests on supply chains.

“Supply chains are depleted; inventories up and down the supply chain are empty. Lead times increasing, prices increasing, [and] demand increasing. Deep freeze in the Gulf Coast expected to extend duration of shortages.” (Chemical Products)

“Overall capacities are full across our industry. Logistics times are at record times. Continuing to fight through shipping and increased lead times on both raw materials and finished goods due to the pandemic.” (Fabricated Metal Products)

Others cite the skyrocketing prices of materials due to scarcity. According to the report, every commodity tracked by the ISM (with the exception of dairy products) is up or in short supply. Hit hardest by rising prices and shortages are technology producers.

“Things are now out of control. Everything is a mess, and we are seeing wide-scale shortages.” (Electrical Equipment, Appliances & Components)

While the numbers continue to surge, what’s not present in them is the squeeze many manufacturers face: short supply, long turnaround, and rising prices — all in the face of increased demand.

Global supply chain issues persist

Global supply chain woes aren’t a new problem, and the manufacturing industry has persisted in spite of them for the better part of the last year. Now, with ramping demand and long lead times finally coming to a head, the manufacturing industry is poised to take on water due to these persistent sourcing issues.

The global semiconductor shortage in particular has wreaked havoc on broad sectors. The inability of companies to source semiconductors from even second- and third-tier suppliers has caused full-blown stoppages to production and driven the cost of production even further for many companies.

Despite the headwinds and the pessimistic outlook of industry executives, manufacturing’s numbers remain strong. While they’re bound to fluctuate at current levels, signs point to continued stability and seasoned companies seek to adapt in the face of new challenges.

As supply chains continue to struggle, it becomes even more important to rely on third-party partnerships for service. You can always count on the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
Call for Help