Supplier deliveries continued to slow as manufacturers worked to restock their inventories, according to the latest figures from the Institute for Supply Management's manufacturing report, released Monday. The ISM Supplier Deliveries Index was at 60.5 in October, up from 59.5 in August. Readings above 50 indicate slowing deliveries.
"It continues to be labor issues, primarily at supplier facilities, coupled with difficulty in companies providing forecasts to them," ISM Manufacturing Business Survey Committee Chair Timothy Fiore said on Monday. Companies ISM surveys have likely been understating forecasts, leading suppliers to struggle to keep up when demand grew, he said.
The monthly survey also found that pricing power remains with suppliers as the Prices Index rose nearly three percentage points to reach 65.5% for October. It is the highest that prices have been since October 2018, according to ISM.
The overall PMI grew 3.9 percentage points to reach 59.3% in October. It was the fifth-straight month of growth for the manufacturing sector, but the number doesn't indicate if the sector has reached pre-pandemic levels of output.
While supplier deliveries were still slowing, companies did indicate that their inventories were finally growing. The Inventories Index reached 51.9 after showing contracting inventories in the September report.
"We entered expansion, indicating that suppliers made progress catching up to production demand and panelist companies are stocking for the future," Fiore said on a call with reporters.
But the improvement seen in the inventory numbers was not shared in the measure for customer inventories, which continue to be too low, according to the ISM survey.