4 April, 2018, 12:00 am
WASHINGTON – US factory activity slowed in March amid shortages of skilled workers and rising capacity constraints, but growth in the manufacturing sector remains underpinned by strong domestic and global economies.
The Institute for Supply Management (ISM) survey published on Monday also showed a surge in the cost of raw materials and worries among manufacturers about the impact of steel and aluminum import tariffs imposed by President Donald Trump last month to shield domestic industries from what he has described as unfair competition from other countries.
“Demand remains robust, but the nation’s employment resources and supply chains are still struggling to keep up,” said Timothy Fiore, chair of ISM’s manufacturing business survey committee.
The ISM said its index of national factory activity slipped to a reading of 59.3 last month from 60.8 in February.
A reading above 50 in the ISM index indicates growth in manufacturing, which accounts for about 12 per cent of the US economy.
The survey’s prices index jumped to its highest level since April 2011.
There were price increases across 17 of 18 industry sectors last month.
While a measure of new orders dropped, a gauge of backlog orders rose to levels last seen in May 2004.
The survey’s customers’ inventories index was at its lowest level since July 2011.
A measure of factory employment dropped last month and the ISM said there were indications that labor and skill shortages were affecting production.
Seventeen industries including fabricated metal products, computer and electronic products, machinery, and chemical products reported growth last month. Apparel, leather and allied products was the only industry reporting a decrease.
Machinery manufacturers said the tariffs on steel and aluminum imports were “causing panic buying, driving the near-term prices higher and leading to inventory shortages for non-contract customers.”