Economy

IHS Markit's PMI of 62.1 Shows Robust Growth in June

Written by David Schollaert

July 6, 2021

“June saw surging demand drive another sharp rise in manufacturing output, with both new orders and production growing at some of the fastest rates recorded since the survey began in 2007,” said Chris Williamson, chief business economist at IHS Markit, reporting that the research firm’s U.S. Manufacturing Purchasing Managers’ Index (PMI) posted a robust 62.1 last month. “The strength of the upturn continued to be impeded by capacity constraints and shortages of both materials and labor, however, meaning concerns over prices have continued to build.”

Supplier delivery times lengthened to the greatest extent yet recorded as suppliers struggled to keep pace with demand and transport delays hindered the availability of inputs. Factories were increasingly prepared, or forced, to pay more to secure sufficient supplies of key raw materials, resulting in the largest jump in costs yet recorded, Williamson said. “Strong customer demand in turn meant producers were often able to pass these higher costs on to customers, pushing prices charged for goods up at a rate unbeaten in at least 14 years.”

Labor shortages and the lingering effects of the pandemic continue to delay the recovery. “Capacity needs to be boosted and supply chains need to improve to help alleviate some of the inflationary pressures,” Williamson said. “However, companies reported increasing difficulties filling vacancies in June, and raising COVID-19 infection waves in Asia threaten to add to supply chain issues.”

Vendor performance deteriorated to the greatest extent on record. Input costs, meanwhile, showed the largest jump on record, feeding through to another record rise in factory selling prices. Hopes of a sustained period of strong client demand strengthened output expectations, as the degree of confidence reached a seven-month high, IHS Markit reported.

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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