Economic activity in the U.S. manufacturing sector grew at a slower pace in January compared with December, largely due to an increase in COVID-19 cases that caused labor shortages for manufacturers and their suppliers, according to the Institute for Supply Management's (ISM) (Tempe, Arizona) Report on Business. Industrial Info is tracking more than $25 billion in high- and medium-probability (70-99% chance of kicking off as planned) capital-spending projects in the U.S. Industrial Manufacturing Industry that are planned to begin construction in the first quarter.

The ISM's Purchasing Managers Index (PMI), which tracks 18 manufacturing industry sectors in the U.S, showed manufacturing activity slowed in January. The most recent month saw a PMI of 58.7%, down from 60.5% in December.

However, December's reading was the highest level in almost two and a half years, and close to a 16-year peak.

The executives surveyed indicated labor shortages at their facilities due to COVID-19 inhibited January's growth and will continue to do so until the crisis subsides. "Absenteeism, short-term shutdowns to sanitize facilities, and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential," said Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee.

Manufacturers also noted a decline in supplier performance. The ISM's Supplier Deliveries Index highlighted difficulties with balancing COVID-19 disruptions and an increasing demand for goods. A reading below 50% indicates faster deliveries. The index for January registered 68.2%, 0.5 percentage points higher than December, meaning deliveries are slowing even further.

The index has gone up every month since August, and supplier's labor issues are not expected to subside in the near future. Seventeen of the 18 industries surveyed reported slower deliveries in January.

First-Quarter Industrial Manufacturing Project Kickoffs
NTT Global Data Centers, a subsidiary of Nippon Telegraph and Telephone Corporation (Tokyo, Japan), is preparing to kick off construction in March on a $1 billion Phase I grassroot data center in Mesa, Arizona. The first phase is part of a seven-phase, 1.5 million-square-foot data center campus project valued at $7 billion. Completion is expected in December. For more information, see Industrial Info's project report.

In the automotive sector, Toyota Motor North America Incorporated, a subsidiary of Toyota Motor Corporation (NYSE:TM) (Aichi, Japan), began construction earlier this month on an $830 million vehicle assembly plant expansion and equipment addition in Huntsville, Alabama, to enhance the production capacity of new Mazda and Toyota models at the plant. Completion is planned for the end of July. For more information, see Industrial Info's project report.

Port Freeport Incorporated's backland development expansion at its Velasco Terminal in Freeport, Texas, is currently in its engineering phase. Kickoff is scheduled for March, with completion in August 2022. For more information, see Industrial Info's project report.

Target Corporation (NYSE:TGT) (Minneapolis, Minnesota) is gearing up to kick off construction of its grassroot distribution center in Houston, Texas. The project, dubbed Project Bullseye, includes a 675,000-square-foot building on a 20-acre site, to provide fulfillment and distribution operations for the region. For more information, see Industrial Info's project report.

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