WASHINGTON (AP) – U.S. manufacturing expanded at the fastest pace in 37 years in March, signaling rising demand as the epidemic weakens and government emergency aid flows into the economy.
The Institute for Supply Management, a business group of procurement managers, said the plant’s operations jumped to 64.7 last month from 60.8 the previous month. This is the highest figure since December 1983. Some revenue may reflect a return from February, when heavy winter weather in Texas, Louisiana and other southern states left some oil refineries and petrochemical plants off the grid.
New orders, production և leases have jumped, more companies have expressed optimistic prospects for future business conditions. Many firms, however, reported difficulties in meeting demand, as tight supply chains delayed parts deliveries, and many firms struggled to recruit enough new employees.
“Prolonged lead times, large shortages of essential commodities, rising commodity prices, and transportation difficulties affect all sectors of the manufacturing economy,” said Timothy Fiore, Chairman of the ISM Manufacturing Business Research Committee.
These concerns may exacerbate fears that inflation will rise in the coming months, as the post-epidemic surge in spending may continue to exceed supply. International freight is being stifled by ports that often have fewer workers to prevent the spread of viruses. The blockade of the Suez Canal, which has not yet been resolved, has further disrupted international traffic.
Many economists expect inflation to rise in the coming months, but only temporarily. As supply bottlenecks are resolved, inflation should ease, analysts say.
Americans have changed their spending during the epidemic because most customers are reluctant or unable to eat, shop or go to the movies as before. Instead, they spend more on factory products, such as new cars, expanded home office furniture, and sports bikes.
Factories have been steadily re-employing workers since last spring, but only two-thirds of the jobs lost due to the epidemic have been returned.