U.S. manufacturing growth slowed in December with continuing delays at West Coast ports being cited as a contributing factor, according to the Institute for Supply Management.
Comments from companies surveyed indicated a “negative impact on imported materials shipment due to the West Coast dock slowdown,” the ISM said on Friday.
"West Coast port issues have greatly impacted our incoming materials. We are air freighting many parts from Japan and Asia to support production while parts sit at the dock," a producer of fabricated metal products said.
A textile mill company said: "West Coast ports are creating delays for imported goods."
A machinery maker said: “The West Coast ports slow-down is really affecting deliveries of our Asian purchases."
The comments followed several others in recent months from companies affected by the port slowdowns.
According to the ISM, economic activity in the manufacturing sector expanded in December for the 19th consecutive month, and the overall economy grew for the 67th consecutive month. But the pace of growth slowed in December, owing partly to the port disruption.
The December Purchasing Managers Index registered 55.5 percent, a decrease of 3.2 percentage points from November’s reading of 58.7 percent, but still in positive territory as is any reading above 50 percent.
The ISM New Orders Index registered 57.3 percent, a decrease of 8.7 percentage points from the reading of 66 percent in November. The Production Index registered 58.8 percent, 5.6 percentage points below the November reading of 64.4 percent. The Employment Index registered 56.8 percent, an increase of 1.9 percentage points above the November reading of 54.9 percent. Inventories of raw materials registered 45.5 percent, a decrease of 6 percentage points from the November reading of 51.5 percent, the ISM said on Friday.
The New Year is beginning with no end in sight to West Coast port delays, which began late in the summer at the ports of Los Angeles and Long Beach, due to a combination of chassis and driver shortages, big ship offloading surges and higher volumes due to the resurgent U.S. economy. The delays worsened at LA-Long Beach and spread up the coast beginning in October following what port employers say is labor disruption by members of the International Longshore and Warehouse Union. Employers and the ILWU have been negotiating since May but have yet to agree to a new contract to replace the prior contract that expired on July 1. The prior three contracts, which expired on July 1 of 1999, 2002 and 2008, were all tentatively agreed to in those calendar years, though the 2002 agreement wasn’t ratified by the union rank and file until January, 2003.
It still remains unclear how much wider economic damage is being done by the port strike. International trade economist Jock O’Connell told the Los Angeles Times in December that the delays at LA-Long Beach “does act as a drag on the economy.” O'Connell told JOC.com on Friday: "Port congestion along the West Coast is hampering economic activity locally, regionally and nationally." The Federal Reserve Bank of San Francisco has not mentioned the port issues in any public statement so far, a San Francisco Fed spokesman told JOC.com on Friday.
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