Another Day, Another Strong Manufacturing Survey

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The bigger declines came out of the indices for Production and Capacity Utilization. Again, these indices still sit at strong levels well above past years’ readings but did markedly decelerate in April. Comments highlighted in the release help to give some anecdotal evidence as to the reasons why production has hit the brakes. A few common themes throughout the comments include the impact of winter storms, rising prices (especially for inputs and freight), a lack of labor, and supply chain strain.

Other areas of the report back up those claims. Regarding prices, Prices Paid rose for the ninth month in a row topping 70 for the first and only time since October 2004. Meanwhile. those price increases are being passed along as the index for Prices Received rose to a record high.

Employment was another area that was frequently flagged as a concern among reporting businesses. Many comments noted the difficulty in hiring even with generous pay offers. Even though there seems to be trouble finding enough workers, workers are coming back at a historic rate. The index for Employment (both current conditions and expectations) marked the highest level to date as did Wages & Benefits. Additionally, the month-over-month rises in the indices stand in the top few percent of all months in the history of the survey. In other words, businesses are and want to continue to take on more employees and are raising pay to do so. On top of raising headcounts, Capital Expenditures also continue to grow although there was some deceleration in April. 

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