Demand for manufacturing is on the rise again after the Covid-19 pandemic forced the industry to stall. New figures show that the ISM manufacturing index rose 0.4 pts to 59.9 in August, with any reading above 50 indicating growth in the manufacturing sector. New orders are flooding the industry, but manufacturers are finding it hard to secure skilled workers to meet this boom in demand. In August, factory employment fell to its lowest in nine months. Even though figures suggest the US unemployment rate is still high following the sharp peak of job losses caused by the pandemic, experts estimate that while the official unemployment rate dropped to 4.8% in August, it may actually be as high as 22% according to different measures.
The US Sees Increased Demand for Manufacturing Following COVID-19 Slump
The US manufacturing industry has been experiencing a post-pandemic surge in orders since the end of spring. The ISM manufacturing index increased to 61.2 in May, around the time that the US economy reopened, which caused a rise in orders. However, the industry has struggled to meet these orders due to continued disruptions to the supply chain, leading to a lack of raw materials and shortages of workers. These factors have led to short-term shutdowns, limiting the industry’s potential to recover.
During the toughest months of the pandemic, restrictions in the country prevented many Americans from going to work, putting immense strains on supply chains and disrupting the productivity of manufacturers and their suppliers. The forced economic shutdown also reduced the demand for manufacturing.
Now, over half of the adult population in the US is fully vaccinated, which has allowed the government to lift restrictions and reopen the economy. This has allowed many to return to work, generating a surge in demand. However, supply bottlenecks are still persisting.
Worker Shortages Limit Growth Potential
Limited access to skilled workers is playing a major role in holding back the growth of the industry. At the beginning of the pandemic, around 1.4 million Americans working in the manufacturing sector lost their jobs, which set the industry back by a decade. However, while it has recouped 63% of the jobs lost during the early days of the pandemic, more than half a million jobs have not been added back.
According to a new study conducted by Deloitte and the Manufacturing Institute, there is a manufacturing skills gap in the US, which is leading to a lack of skilled workers for jobs, which could lead to 2.1 million unfilled jobs by 2030. According to the manufacturers that the study surveyed, the right talent is 36% harder to find now than it was before the pandemic in 2018.
These struggles to find the right workers are reflected in the industry’s employment index figures, which fell from 52.9 in July to 49.0 in August. 77% of manufacturers predict that their difficulties in findings and attracting skilled workers will last beyond 2021.
Learn More with EXIMA
Found this article helpful? Check out our Media Page for more!