WASHINGTON (Reuters] – U.S. manufacturing activity slowed to October, as a gauge of new orders declined to a 16 month low. Meanwhile, delays in raw material delivery continued at factories.

On Monday, the Institute for Supply Management (ISM), reported that its index of national manufacturing activity fell to 60.8 from 61.1 in September.

An index reading higher than 50 means that there has been an increase in the manufacturing sector, which is responsible for about 12% of America’s economy. Reuters polled economists and predicted that the index would fall to 60.5.

Global supply chains are clogged and the economy is facing shortages across all industries. In the third quarter, economic growth was slowed to the slowest pace for over a decade due to shortages in supply.

It has been particularly hard for the motor vehicle sector. Except for the spring 2020 shutdown, which had a severe impact on production, the third quarter of 2018 was the most difficult period in motor vehicle production since 2009. According to economists, supply chains will remain tight until 2022 according to businesses and economists.

According to the ISM Survey, supplier deliveries rose from 73.4 September’s 73.4 reading to 75.6 in October. A reading above 50% indicates slower deliveries. High inflation continued at the factory gates because of longer waits. This survey shows that the measure of manufacturers’ prices increased to 85.7, from 81.2 in September.

This is causing consumers to pay more. It also raises concerns about the possibility that inflation, as Federal Reserve Chair Jerome Powell repeatedly stated, could become permanent rather than temporary. Friday’s government report stated that wages grew at the fastest pace in three quarters.

ISM Survey’s forward looking new orders sub-index fell to 59.8 from 66.7 in September. This is the lowest reading since June 2020. A rebound is possible, as customer inventories remain low.

However, subsiding coronavirus patients could encourage greater consumption of services, and reduce demand for goods. Although there was a decrease in unfinished work last month, the order backlogs are still very high.

The measure of unemployment rose to 52 in October from 50.2 in September. This is in addition to a huge improvement in the perceptions of labor markets by consumers last month. It suggests that employment has increased in October, after the economy had created the least jobs in nine months.

However, worker shortages remain a problem. At the end August, there were 10.4 millions unfilled positions. On Friday, the Labor Department will publish its highly watched employment report on October.