Economic Report: U.S. manufacturers grow in August at faster pace, ISM finds, but shortages are a big obstacle


The numbers: Delta has added fresh stress on the U.S. economy, but companies face an even bigger challenge in finding the supplies and workers they need to keep pumping out goods and services.

A closely followed index of U.S.-based manufacturing rose to 59.9% in August from 59.5% in the prior month, the Institute for Supply Management said Wednesday.

Economists polled by MarketWatch had forecast a reading of 58.6%. Any number above 50% signifies growth.

Read: Consumer confidence sinks to 6-month low on delta anxiety and high inflation

Big picture: Businesses have plenty of demand, even with delta spreading across he country. The biggest problem are broad shortages of supplies tied to the unprecedented Covid disruptions in the global economy and an explosion in pentup demand after the U.S. mostly reopened this year.

Hiring enough workers to produce the goods and services has also become a major hurdle.

Millions of people who had jobs before the pandemic still haven’t returned to work — and delta could make them wait even longer. Some companies have even had to cut back because they don’t have enough workers.

The supply and labor shortages eventually should ease and return to pre-Covid patterns, though the delta variant could push out the timetable.

In the meantime businesses and consumers can expect to pay higher prices spawned by the shortages. Inflation in the U.S. is running at the highest level in 30 years, based on the Federal Reserve’s preferred price barometer.

Market reaction: The Dow Jones Industrial Average

and S&P 500

were little changed in Wednesday trades.

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