U.S. manufacturing activity grew at a slower pace in April, restrained by shortages of inputs as rising vaccinations against COVID-19 and massive fiscal stimulus unleashed pent-up demand, Trend reports citing Reuters.
The survey from the Institute for Supply Management (ISM) on Monday showed record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products across industries.
The pandemic, now in its second year, has severely disrupted supply chains. The ISM noted that “companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus impacts limiting availability of parts and materials.” It cautioned that worker absenteeism, short-term shutdowns due to part shortages and difficulties in filling open positions could limit manufacturing’s growth potential.
The ISM’s index of national factory activity fell to a reading of 60.7 last month after surging to 64.7 in March, which was the highest level since December 1983. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index edging up to 65 in April.
The White House’s massive $1.9 trillion pandemic relief package and the expansion of the COVID-19 vaccination program to all adult Americans have led to a boom in demand. But the pent-up demand is pushing against supply constraints.
Still, manufacturing remains supported by lean inventories both at factories and customers.
U.S. stocks rose as upbeat earnings strengthened hopes for sustained profit growth for companies. The dollar fell against a basket of currencies. U.S. Treasury prices were higher.