ISM: Supply Managers Concerned Over Lasting Impact From Harvey

--Most Concerned About Input Prices, Supplier Deliveries, Shortages

--Less Concerned About New Orders, Production, Employment

By Holly Stokes

     WASHINGTON (MNI) - The Institute for Supply Management's special survey on

the impact of Hurricane Harvey, released Thursday, showed that due to national

economic reliance on the Gulf Coast, the economic impact in months to come will

reach far beyond those areas hit by Harvey.

     In particular, respondents worried about lasting challenges for U.S.

companies in regards to pricing, supplier deliveries, and shortages of certain

commodities. 67% of supply managers expressed concern that input material

pricing may steepen, and create at least a somewhat negative impact over the

next three months, with 56% believing this effect will be felt even in six

months time. In regards to supplier deliveries, 56% of respondents believed that

there would be a somewhat negative impact over the next three months, with 36%

believing this effect would continue over the next six months.

     The survey also showed widespread expectations for shorty supply of fuel

and petrochemical feed stocks over the next three months, which could impact

industries such as Plastic & Rubber Products; Food, Beverage & Tobacco Products;

Wholesale Trade; and Construction.

     While these percentages reflect the weighted responses of both

manufacturing and non-manufacturing sub-sectors, it is important to note that

due to the prevalence of manufacturing inputs produced in Texas, that

manufacturing sub-sector respondents consistently showed greater concern.

     Respondents reported less concern of an effect on production, new orders,

and employment. Reported as the least likely to be negatively impacted by

Harvey, only 12% of respondents believed that there would be at least a somewhat

negative impact over the next three months. This contrasts sharply with Sept 2

week Jobless Claims, which showed a 62,000 spike in initial claims, with Texas's

NSA claims surging by 51,637. The survey's expectation of limited negative

impact on employment is further contended by analysts looking at historic

impacts of Katrina and Sandy. Barclays states that claims' three month trend

following Katrina and Sandy vs the three months preceding was -17,000 and -6,700

respectively. As analysts continue to forecast larger hits to claims and

payrolls, it remains to be seen if supply managers are correct in their relaxed

employment expectations.

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com

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