La Jornada – Recovery of US manufacturing activity

US manufacturing activity unexpectedly rebounded in August. The survey by the Institute of Supply Management (ISM, for its English acronym) found that the national industrial activity index rose to 59.9 last month from 59.5 in July.

A reading above 50 points to the expansion of manufacturing, a sector that accounts for 11.9 percent of the US economy and which in turn is closely linked to the Mexican economy.

According to the agencies, the demand is being driven by companies looking to replenish stocks that have fallen dramatically in the first half of the year.

The inventory build-up, which is expected to be the main driver of economic growth for the rest of the year and into 2022, has been frustrated by supply constraints. The ISM noted continued problems in ensuring adequate raw materials, a situation exacerbated by the disruptions caused by the recent wave of Covid-19 infections, especially in Southeast Asia, as well as by port congestion in China.

The lack of inputs has led to higher prices for both manufacturers and consumers. However, there seems to be light at the end of the tunnel. ISM’s measure of supplier delivery performance to manufacturing organizations declined further in August, indicating some improvement in the pace of delivery,” Reuters adds.

Even as demand for manufacturing recovers, the shortage of workers continues, the agencies report. In August, factory employment contracted last month and fell to its lowest level since November. ISM President Timothy Fiore highlighted “a clear cycle of job rotation as workers choose more attractive working conditions”.

(With information from Reuters)

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