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November factory output picks up

SILVER SPRING, Md. — U.S. manufacturing activity grew at a faster pace in November with producers trying to keep up with demand amid ongoing supply shortages and delays.

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose to a reading of 61.1 in November, just above September’s 60.8.

Any reading above 50 indicates growth in the manufacturing sector. The manufacturing sector has recorded 18 straight months of growth going back to spring of 2020 when the pandemic broke.

The group’s measure of factory production jumped to a seven-month high and new orders accelerated, underscoring how resilient consumer demand for goods and solid business investment have underpinned the manufacturing recovery.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement,” Timothy Fiore, chairman of the institute’s manufacturing business survey committee, said in a statement.

Sub-categories of new orders, production and employment all grew at a faster pace in November, though many respondents commented that they are still struggling to hire, despite some modest progress over the past three months. The institute’s report said that 86% of the employment comments related to hiring, with 51% of those respondents saying they are struggling to fill positions, an increase from October.

Businesses are also struggling to keep their inventories stocked due to elevated demand. The institute’s customer’s inventories index registered a reading of 25.1 in November, the 62nd straight month that it’s been what is considered too low. While it’s not good for stores to have sparse or empty shelves, it will likely spur more production ahead to remedy that situation, the report said.

“All segments of the manufacturing economy are impacted by record-long raw materials and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products,” Fiore said.

Prices are still elevated, but retreated somewhat in November to a reading of 82.4 from 85.7 in October.

Thirteen of the 15 manufacturing categories reported growth last month, led by apparel and furniture. The only two that contracted were printing and primary metals.

Fiore said the broad sentiment of the institute’s panel remained strongly optimistic, but they “remain focused on the importance of improving supply chain issues to respond to ongoing high levels of demand.”

The institute’s U.S. employment gauge also rose to a seven-month high, suggesting the pace of factory hiring picked up last month. While the sector has made steady progress toward returning to pre-pandemic employment levels, it has faced similar hiring challenges as other industries in attracting and retaining talent.

A measure of order backlogs fell to its lowest level since the start of the year, indicating backlogs are growing at a slower pace. The group’s prices paid index — though still very high — declined for the first time in three months, a trend that could continue if crude oil prices decline further.

The government’s jobs report on Friday is expected to show manufacturers added 42,000 workers in November, following a 60,000 bump in October. Across all industries, employers are expected to have added more than half a million jobs.

The institute’s figures are consistent with separate data showing firmer manufacturing results in Europe and China. Despite improvements last month at euro-area and Chinese factories, input shortages, high prices and supply-chain woes remain headwinds for producers.

Information for this article was contributed by Matt Ott of The Associated Press and by Reade Pickert of Bloomberg News (WPNS).

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