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US manufacturing sees surprise slowdown as China lockdowns bite

WASHINGTON (AFP) – United States (US) factory activity last month dropped to its lowest level since July 2020 as supply chain snarls intensified amid a new wave of pandemic lockdowns in China, an industry survey said on Monday.

The Institute for Supply Management said its manufacturing index dropped almost two percentage points to 55.4 per cent in April, against expectations for a modest increase but still above the 50-per-cent threshold indicating expansion.

The culprit was a renewed flareup in the supply chain woes that have dogged American factories throughout their recovery from the COVID-19 downturn, and in particular China’s aggressive moves to stop renewed outbreaks in Shanghai and other major cities.

“Overseas partners are experiencing COVID-19 impacts, creating a near-term headwind for the US manufacturing community,” the survey’s chair Timothy Fiore said.

“Fifteen per cent of panelists’ general comments expressed concern about their Asian partners’ ability to deliver reliably in the summer months, up from five per cent in March.”

In a comment to the survey, a chemical products company pointed to the business closures in Shanghai as complicating their own operations.

“Long delays at ports, including in the US, are still providing supply challenges. Inflation is out of control. Fuel costs, and therefore freight costs, are leading the upward cycle,” the commenter said.

“At some point, the economy must give way; it will be tough to have real growth with such pressure on costs,” the respondent said, adding business nonetheless was “brisk.”