The numbers in the most recent Manufacturing ISM Report on Business indicate the manufacturing sector expanded for the 19th consecutive month and the overall economy grew for the 67th consecutive month, but respondents hinted at some lingering concerns that could threaten continued economic growth.
After noting solid readings above 50 percent for the PMI, new orders index, production index and employment index, ISM Manufacturing Business Survey Committee Chair Bradley J. Holcomb said comments from the panel were mixed, with "some indicating that falling oil prices have an upside while others indicate a downside" and others mentioning "the negative impact on imported materials shipment due to the West Coast dock slowdown."
The falling oil prices have been a blessing for shipping costs, but they stunted energy-related manufacturing projects, as well, with one respondent in the computer and electronic products category saying "business has not slowed as of yet, but outlook is that business should start slowing, energy market related."
A respondent who works in chemical products said: "Collapse of oil prices is supporting negotiations for significantly lower petrochemical related material prices. Sales are slowing down as buyers reduce inventory in anticipation of lower prices."
And a respondent who works in apparel, leather and allied products said: "Energy prices falling are a blessing and a curse for us. We will experience downside as projects are canceled by energy companies, but suspect manufacturing in the U.S. will improve driving upside in that space."
Meanwhile, a labor dispute at ports from Tacoma, WA, to Long Beach, CA, has affected the timely delivery of goods from Asia. The slow offloading of cargo containers at the facilities has disrupted companies' supply chains and caused pain points in inventory management.
A fabricated metal products executive said: "West Coast port issues have greatly impacted our incoming materials. We are air freighting many parts from Japan and Asia to support production while parts sit at the dock."
A respondent who works in textile mills said: "West Coast ports are creating delays for imported goods," and another in machinery said, "The West Coast ports slow-down is really affecting deliveries of our Asian purchases."
