By Jeffry Bartash
Supply shortages are the worst since the pandemic, ISM finds
Manufacturers who produce products tied to artificial intelligence have been very busy.
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American manufacturers grew in July at the fastest pace in more than four year as they bore the fruits of a massive boom in artificial intelligence, but they’re also being hampered by pandemic-era-like supply shortages and higher inflation.
A closely followed ISM gauge of manufacturers rose to 55.6% in July from 53.3% in the prior month. Any number above 50% indicates business is growing.
“Business is still solid,” a senior executive at a manufacturer of metal parts told the Institute for Supply Management. “W e will increase revenue by 3% to 5%.”
The problem is, getting enough critical supplies, such as metals, fertilizer and computer chips, and getting them on time. A lack of supplies have pushed prices higher and added to U.S. inflationary pressures.
“The pricing volatility and lead-time extensions in this market are arguably worse than the pandemic era,” an executive at a maker of electrical equipment said.
The ISM surveys executives every month about how their businesses are doing. Manufacturers employ about 13 million people and still play a vital role in the U.S. economy.
Big picture: It’s good times, bad times for American manufacturers.
They are benefiting from a frenzy of spending on artificial intelligence, but the conflict with Iran and new Trump tariffs are acting as drags on growth.
The result: Manufacturers are also being very cautious, especially when it comes hiring new workers.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose sharply in Monday trading and moved closer to all-time highs.
-Jeffry Bartash
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08-03-26 1021ET
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