“Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
Demand continues to be strong, as manufacturers are having a hard time keeping up and prices keep rising. “Virtually all basic and intermediate manufacturing materials are experiencing price increases as a result of product scarcity,” Fiore said.
The only commodity that didn’t get more expensive last month was acetone, which is most commonly used as a solvent to manufacture plastics and other industrial products.
Overall, activity in the manufacturing sector, as measured by the purchasing managers index, waned in June. That index fell to 60.6%, down 0.6 percentage points and slightly below what economists had expected. Such a marginal slowdown is no surprise given the headwinds producers are facing, analysts at Action Economics said in a note.
At some point supply constraints will begin to affect activity, and while the high demand is a good thing for the recovery, the industry is in a tricky spot.