Area manufacturing sector’s growth remains steady in May

Manufacturers grow safety stock as supply chain instability continues

Last updated on June 2nd, 2021 at 04:01 pm

The headline number in the latest Marquette-ISM Report on Manufacturing for May showed continued growth in southeastern Wisconsin’s manufacturing sector.

The Milwaukee-area PMI in the report was 64.49 for May, up from 63.69 in April. A reading above 50 indicates the manufacturing sector is growing.

A majority of survey respondents expressed confidence in business conditions going forward. However, the six-month business outlook diffusion index, which attempts to balance positive and negative bias, decreased from 66.67% in April to 64.71% in May.

The shift was driven by an increase from 40% to 47.06% in the number of respondents expecting business conditions to remain the same. Those expecting conditions to worsen dropped from 13.33% to 11.76%. Those expecting positive conditions also dropped from 46.67% to 41.18%.

New orders fell in May while the back log of orders increased, which survey respondents attribute to international shortages.

Respondents highlighted three areas where they are experiencing challenges.

“International shortages are causing greater safety stock due to supply chain instability,” one respondent said.

“Fabrication lead times continue to be 8 weeks plus and electronics have a great deal of variability in their lead times,” another respondent said.

Labor continues to be a challenge for area manufacturers, respondents say.

“Manpower shortages cannot find candidates for open roles, and competition for other companies paying more are causing human capital issues,” a third respondent said.

“Even with new CDC guidelines, worker shortages continue causing production delays,” another respondent said.

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