The manufacturing boom's bottleneck
The manufacturing sector has bounced back from its pandemic knockout. But as the economy reopens, factories can't keep up with orders.
Why it matters: The materials manufacturers need are hard to find and prices for them are soaring.
- The shortages could delay orders for companies relying on them, while the price surges could ripple out to the consumer.
Stunning stat: An important gauge of manufacturing activity in America matched the highest level in 17 years last month, a closely eyed survey by the Institute for Supply Management showed Monday.
Context: Last April — at the onset of the pandemic — the industry was in the worst shape since the global financial crisis.
- The biggest winners since then: food and beverage manufacturers, along with makers of computers, chemicals and metals.
- Losers: petroleum and coal manufacturers — the only sector to contract last month.
Yes, but: Material shortages could prevent factories from making good on the surge in orders.
What they're saying: “Everything is a mess, and we are seeing wide-scale shortages," one appliance and electrical equipment maker said.
Plus: Factories have increasingly reported paying more for materials, with the latest data showing manufacturers paying the most since 2008.
What's going on: Companies are "not able to have as many people at the sawmills or as many people in the foundries making steel" because of COVID-19 work restrictions, leading to manufacturers' shortages, Ben Ayers, an economist at Nationwide, tells Axios.
What to watch: The problems come as the Biden administration prioritizes revitalizing the sector and boosting jobs — promises made by his predecessor.