Board Converting News, September 27, 2021

NAM: Manufacturing Output Strongest Since June 2019

production will have risen by 6.8 percent in 2021, with 4.2 percent growth in 2022. Regional surveys from the New York and Philadelphia Federal Reserve Banks reflected stronger manufacturing expansions in September, with a positive outlook for the next six months. The forecast for capital spending in the Empire State release was the best since January 2018, with technology spending seen rising at a record pace. Yet, delivery times and pricing pressures remained signifi- cant challenges in both districts. Retail sales rose 0.7 percent in August, up from the 1.8 percent decline seen in July and continuing the seesaw pattern seen over the past five months. Motor vehicle and parts dealers reported 3.6 percent fewer sales in August, with the chip shortage and supply chain issues hindering spending in that category. Excluding motor automobiles, retail spending increased 1.8 percent for the month. Spending at retailers was boosted by very robust

Manufacturing production slowed significantly in August, edging up 0.1 percent for the month after rising by 1.6 per- cent in July, according to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manufacturers (NAM). Much like the larger economy, manufacturing pro- duction has softened likely due to supply chain disrup- tions, workforce shortages and rising raw material costs. Still, manufacturing production has increased 5.9 percent over the past 12 months, or 3.2 percent year to date, with output in the sector the strongest since January 2019. Similarly, manufacturing capacity utilization edged up from 76.6 percent in July to 76.7 percent in August, also the best reading since January 2019. Looking at annual average growth rates, Moutray expects that manufacturing

growth at non-store retailers (up 5.3 per- cent), among others. Spending at food ser- vices and drinking places was flat in August, slowing from the 1.3 percent gain seen in July and likely dampened by rising delta variant cases of COVID-19 in some markets around the country. Consumer prices rose 0.3 percent in Au- gust, the slowest monthly increase since January. Excluding food and energy, core consumer prices edged up 0.1 percent in August, the weakest pace since February. Prices for used cars and trucks and transpor- tation services, both of which soared sharply earlier in the year, declined in August. New vehicle prices were higher. The consumer price index has risen 5.2 percent year-over-year, pulled back from 5.3 percent in June and July, which was the fast- est year-over-year pace since September 2008. Likewise, core inflation increased 4.0 percent year-over-year in August, decelerat- ing for the second straight month from 4.5 percent in June, the highest since Nov. 1991. Small business owners continue to expe- rience record-level challenges with prices and employment, according to the National Federation of Independent Business. Half of all respondents in the August survey said that they had job openings that they were unable to fill, with 60 percent saying that there were few or no qualified applicants, also an all-time high. Kentucky created the most net new man- ufacturing jobs in August, adding 5,700 workers. Post-pandemic onset, Utah has generated the most employment in the sec- tor, adding 8,100 workers over the past 18 months.


September 27, 2021

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