American Manufacturing stayed strong in Q1 2022

Despite all the concerns over higher prices, American manufacturers are still seeing very strong demand.

New orders for manufactured goods in March, up twenty-two of the last twenty-three months, increased $11.8 billion or 2.2 percent to $557.3 billion, the U.S. Census Bureau reported today. This followed a 0.1 percent February increase. Shipments, also up twenty-two of the last twenty-three months, increased $12.6 billion or 2.3 percent to $556.4 billion. This followed a 1.1 percent February increase. Unfilled orders, up fourteen consecutive months, increased $5.5 billion or 0.4 percent to $1,294.8 billion. This followed a 0.5 percent February increase. The unfilled orders-to-shipments ratio was 6.72, down from 6.74 in February. Inventories, up twenty-one of the last twenty-two months, increased $10.4 billion or 1.3 percent to $797.6 billion. This followed a 0.9 percent February increase. The inventories-to-shipments ratio was 1.43, down from 1.45 in February.

New orders for manufactured durable goods in March, up five of the last six months, increased $3.0 billion or 1.1 percent to $275.8 billion, up from the previously published 0.8 percent increase. This followed a 1.7 percent February decrease. Computers and electronic products, up two of the last three months, led the increase, $0.7 billion or 2.6 percent to $26.3 billion. New orders for manufactured nondurable goods increased $8.8 billion or 3.2 percent to $281.5 billion.

The rate of increase for orders, shipments and inventories were all above inflation, so higher costs aren't slowing down business – if anything, it was picking up by the end of March.

But even with the increase in shipments, there still are so many supply chain delays along with COVID shutdowns overseas and longer shipping times. So much so that it’s taking the longest times ever for manufacturers to get the things they need to complete those orders.

ISM data show it’s taking 100 days for US manufacturers to receive production materials, the longest in records dating back to 1987. For capital expenditures, the average commitment time rose to a whopping 173 days, matching the highest on record. https://t.co/InHko0uhha pic.twitter.com/sSZRHegQSv

— Catherine Rampell (@crampell) May 3, 2022

We've also seen that manufacturers are in need of workers more than ever, according to the newly-released Job Openings and Labor Turnover (JOLTS) report. Openings, quits, and new hires are all on the rise, and despite more jobs, there are fewer layoffs than there were a year ago.

Given that circumstance, it would seem that manufacturing is poised to continue the strong job growth that the sector has had in recent months - up by 98,000 jobs in the first 3 months and averaging more than 32,000 new jobs per month over the last year.

The need for workers would also indicate that wages need to go up beyond the 4.6% they’ve gone up for manufacturing in the last year. So let’s see if that starts to bear out in Friday’s jobs report and in wage numbers as Summer hiring approaches, or if it bears out in more strikes like we saw with CNH in Racine and Burlington, Iowa this week.

If anything, these manufacturing-related stats show that some kind of interest-rate driven slowdown wouldn’t be the worst thing in the world, and might give time for manufacturers to “catch up” to what is being demanded. Sure seems like a good time to be in the trades in America, eh?