The manufacturing industry continues to grow

Intelligent Economics > Analysis > The manufacturing industry continues to grow

The  Secretary of the Department of Economic Development and Commerce (DDEC), Manuel Cidre Miranda, announced that the manufacturing sector reflected its eighteenth consecutive month of increase at a monthly rate in October. According to the of Coincident Index Indicators in Manufacturing (IICM), the month of October 2021 registered a preliminary value of 107.0 points (2016=100), an increase of 0.7% compared to the previous month. In the last 10 months this index has been increasing with respect to the year before despite the pandemic, reaching an annual change of 5.4% in October. The Index of Coincident Indicators in Manufacturing (IICM) is a metric and analysis tool that measures industrial activity in Puerto Rico on a short-term or monthly basis in a way that offers visibility into the economic state of manufacturing in Puerto Rico and provides analysis tools to the private sector,  public and academia of an indicator for their corresponding analyses, public policies and projections of economic activity, among others.

On the other hand, the Purchasing manager’s index decreased to 53.5 in November but still remains over the threshold level. A PMI index over 50 represents growth or expansion within the manufacturing sector of the economy compared with the prior month. A reading under 50 represents contraction, and a reading at 50 indicates an equal balance between manufacturers reporting advances and declines in their business. The Purchasing Managers Index (PMI) for Puerto Rico’s manufacturing sector is a collaborative effort between the Puerto Rico Manufacturers Association and the Puerto Rico Institute of Statistics. With November results over 50, it’s the twelfth consecutive month with an expansion of the PMI. In November the Production and Own Inventories sub-indexes decreased with respect to the previous month. New Orders, Employment and Suppliers Deliveries were above the threshold levels suggesting an expansion. New Orders were higher with a PMI of 55.8 in November, being above the threshold for the second consecutive month. Employment increased to 55.8, being above the threshold level for the third consecutive month. Production and Own inventories were below the threshold level in November.  Production PMI in November decreased to 42.3, being below the threshold for the first time in the past four months. Own inventories decreased to 40.4, being below the threshold level for the fourth consecutive month.

On a supplemental survey conducted to manufacturing establishments regarding the pandemic, the factor that affects the most is supplier’s deliveries (57.7%), a reduction of staff (42.3%), a reduction of inventory (50%) and others. The biggest challenge continues to be the Human Resources area (recruitment and absenteeism), decreased clients orders, increased costs and lack of raw materials, delays in supply chain including slower transportation and increased costs of transportation. The issues the Manufacturing establishments point out are compatible with issues around the world. These are not problems that only Puerto Rico is facing, the world’s supply chain is being affected by the same matters.

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