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REPEAT: ISM: Supply Managers Worry About Lasting Harvey Impact

Repeats Story Initially Transmitted at 16:11 GMT Sep 7/12:11 EST Sep 7
--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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