Gloom on the Factory Floor Will Soon Give Way to Cheer
A supply chain broken by the pandemic is slowly getting back on its feet, and improvements will continue rippling through the markets well into the new year.
It all comes down to the consumer.
Photographer: Elijah Nouvelage/BloombergTwo data releases came out last week that told seemingly conflicting stories about the state of the economy. The ISM Manufacturing survey , a key bellwether of factory-owner sentiment, dipped into contraction territory for the first time since May 2020. At the same time, the Personal Income and Outlays report put out by the Bureau of Economic Analysis showed that spending on goods is picking up, with monthly growth on an inflation-adjusted basis clocking in at its fastest pace in a year.
How can factory owners be so negative when consumer spending growth is accelerating? The answer lies in the supply chain and how improvements over the past several months have affected producers, retailers and consumers differently. The adjustment is going to take a few more months, but manufacturers are in line to benefit just as consumers are now.