The manufacturing sector grew last month for the thirteenth month running, albeit at a slightly slower pace than it had in May. The Institute for Supply Management, in its June report on manufacturing business, lowered its manufacturing PMI to 60.6%—above the 50% mark indicating growth, but 0.6 points lower than May’s 61.2% PMI.

Results from the ISM’s accompanying survey of manufacturing executives revealed that months of persistent growth in demand and accompanying shortages of supplies and talent are weighing on manufacturing’s year of post-pandemic growth.

Of the three factors the ISM weights most heavily in calculating its PMI, production continued to grow at a faster rate, new orders’ expansion slowed, and employment moved into contraction territory for the first time in seven months. The production index rose 2.3 points to 60.8%, the new orders index fell 1 point to 66.0%, and the employment index fell 1 point to 49.9%, the highest possible rating indicating contraction.

A respondent at a primary metals firm, in comments attached to the survey, said “lack of labor is killing us.”

Next to employment, surveyed executives list supply bottlenecks as a major pain point. According to the ISM’s latest report, supplier deliveries on average have been getting slower for more than 5 years.

“Supply disruptions continue, with no end in sight!” said an executive working with nonmetallic mineral products.

At the same time, manufacturing companies are under significant pressure to deliver products to satisfy high demand: the ISM’s prices index hit 92.1% in its thirteenth straight month of growth, beating May by 4.1%.

A respondent in the furniture and related products industry said they couldn’t keep up with the increase in orders and were looking at adding a second shift to meet it. “That might not be possible if material availability—for example, lumber products—remains an issue for us,” they said.

The ISM listed lumber as one of its “commodities up in price” for a twelfth month running, along with more than 50 other kinds of supplies. Other increasingly pricey supplies included aluminum (up for 13 months), copper products (13 months), polypropylene (12 months), and steel (11 months).

As for supply shortages, electrical components have been in short supply for nine months; hot rolled steel for eight; and semiconductors, steel, and electronic components for seven.

“Strong sales continue, and production output is at 100%,” said a transportation equipment executive, who noted that the long-running semiconductor shortage had restricted what they could produce.

“Electronic components are by far the biggest challenge,” said a computer and electronics C-suite member who said processor shortages have led their company to redesign printed circuit board assemblies to accommodate different components.

Growth in international trade sped up for both exports and imports for a twelfth month running in June, with imports growing at a faster rate. The index of imports leapt 7.0 points to 61.0% in June while the new export orders index increased by 0.8 points to 56.2%.

Timothy Fiore, chair of the ISM’s manufacturing business survey committee, said companies and suppliers are struggling to meet “increasing levels of demand” thanks to “record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products.” Sluggish hiring, worker absenteeism, and shutdowns due to part shortages, he said, are responsible for limiting manufacturing’s current growth potential.

Despite the difficult conditions, Fiore noted that panelists recorded 16 optimistic comments for each negative one, and seven of the ISM’s 18 surveyed industries reported continued growth.