Milwaukee-area manufacturing sector grows, but labor and supply chain challenges remain

The latest Marquette-ISM Report on Manufacturing for February showed continued growth for the sector in southeastern Wisconsin.

The Milwaukee-area PMI in the report was 61.07 for February, up from 56.87 in December 2020. A reading above 50 indicates the manufacturing sector is growing. The index has now been above 50 for six straight months.

However, the report does not contain data for January due to a lack of survey respondents.

Production has improved by 20%, compared to an 8.8% decline experienced in December. Employment for the month increased slightly and the pace for order backlogs picked up in February compared to December. New orders also grew during the month but at a slower pace than in December.

Despite increased production, manufacturers are still experiencing similar labor and supply chain challenges reported in surveys from previous months.

“Lead times are increasing for raw materials creating a shortage in finished goods, resulting in missed deliveries and price increases,” one survey respondent said.

Another respondent said, “The backlog is increasing through the supply chain. More people need to be hired and trained. Orders are only going to continue to increase.”

Respondents who are optimistic about the sector’s trajectory say manufacturing “appears to have turned the corner – many consumers are looking to order in late Q1” and “work expectations showing a positive direction with post pandemic measures and hiring practices.”

Readings for the six-month business outlook diffusion index, which attempts to balance positive and negative bias, were also not available because of a lack of survey respondents.

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