Area manufacturers report continued pandemic-related disruptions in August

The headline number in the latest Marquette-ISM Report on Manufacturing for August showed overall growth for the Milwaukee area’s manufacturing sector, but at a slower pace than earlier in the year as supply chains remain strained during the COVID-19 pandemic.

The Milwaukee-area PMI for the report was 57.81, up from 57.54 in July but still down from 62.62 in June. A reading above 50 indicates the manufacturing sector is growing.

The six-month business outlook diffusion index, which attempts to balance positive and negative bias, decreased from 65.63% in July to 52.78% in August. Approximately 33% of respondents expect positive conditions, 39% expect conditions to remain the same and 28% of the respondents expect conditions to worsen within the next six months, according to the August diffusion index.

The number of new orders and backlog of orders for area manufacturers continues to grow in August, albeit just slightly compared to last month. Customer inventories and employment saw the largest decline as they both dropped 18.6 and 11.1 percentage points respectively.

Area manufacturers who responded to the Marquette ISM’s monthly survey say COVID-19 continues to strain supply chains with no improvement on material lead times for domestic or international business.

High freight costs are hampering business while raw material and logistic costs are increasing, survey respondents said. Multiple respondents say labor continues to be a challenge with one respondent reporting “increase in working hours increases stress level.”

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