Board Converting News, June 13, 2022

ISM: Manufacturing, Economy Continued Expansion In May

“The New Orders Index reading of 55.1 percent is 1.6 percentage points higher than the 53.5 percent recorded in April. The Production Index reading of 54.2 percent is a 0.6 percentage point increase compared to April’s figure of 53.6 percent. The Prices Index registered 82.2 percent, down 2.4 percentage points compared to the April figure of 84.6 percent. The Backlog of Orders Index registered 58.7 percent, 2.7 percentage points higher than the April reading of 56 percent. “The Employment Index went into contraction territory at 49.6 percent, 1.3 percentage points lower than the 50.9 percent recorded in April. The Supplier Deliveries Index reading of 65.7 percent is 1.5 percentage points lower than the April figure of 67.2 percent. The Inventories Index reg- istered 55.9 percent, 4.3 percentage points higher than the April reading of 51.6 percent. The New Export Orders Index reading of 52.9 percent is up 0.2 percentage point compared to April’s figure of 52.7 percent. The Imports In-

Economic activity in the manufacturing sector grew in May, with the overall economy achieving a 24th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The report was issued last week by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manu- facturing Business Survey Committee: “The May Manufacturing PMI registered 56.1 percent, an increase of 0.7 percentage point from the reading of 55.4 percent in April. This figure indicates expansion in the overall economy for the 24th month in a row after a con- traction in April and May 2020. This is the second-lowest Manufacturing PMI reading since September 2020, when it registered 55.4 percent.

dex fell into contraction territory, decreas- ing 2.7 percentage points to 48.7 percent from 51.4 percent in April. “The U.S. manufacturing sector remains in a demand-driven, supply chain-con- strained environment. Despite the Employ- ment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, according to Business Survey Committee respondents’ comments. “Panelists reported slightly lower rates of quits compared to April. May was a sec- ond straight month of slight easing of prices expansion, but instability in global energy markets continues. Surcharge increase ac- tivity appears to be stabilizing across all in- dustry sectors. Sentiment remained strong- ly optimistic regarding demand, with five positive growth comments for every cau- tious comment. Panelists continue to note supply chain and pricing issues as their big- gest concerns. Demand expanded, with the (1) New Orders Index improving, supported by stronger growth of new export orders, (2) Customers’ Inventories Index remaining at a very low level and (3) Backlog of Orders In- dex increasing. Consumption (measured by the Production and Employment indexes) was mixed during the period, with a com- bined minus-0.7-percentage point change to the Manufacturing PMI® calculation. The Employment Index contracted after expand- ing for eight straight months, but panelists indicated improvement in ability to hire in May compared to April. Challenges with turnover (quits and retirements) and result- ing backfilling continue to plague efforts

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10 June 13, 2022

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