The latest Manufacturing ISM Report On Business revealed that economic activity in the manufacturing sector grew again in February, its ninth consecutive month of growth. Demand for manufactured goods has remained high since the reopening of the economy first started last spring. An interesting development from this recent report, however, is the evidence of widespread shortages across commodities.
As our featured chart above shows, a record 20 commodities were reported in short supply last month. Among these were many of the items you might typically think of as inputs in the manufacturing process, such as aluminum, steel, semiconductors, and plastics.
There was also a record 48 commodities showing price increases last month. These included many of the commodities mentioned above, plus copper, lumber, and crude oil.
The result was a 3.9 point gain in the ISM Prices Index, its highest level since 2008. Historically, this has been consistent with rising price pressure at both the producer and consumer level, something the bond market has been notably conscious of in recent weeks.
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