Improving supply chain conditions kick off H2 in the US
Supply-chain conditions in the US offered encouraging signs to start Q3, according to our supply chain tracker. Inflationary pressures ebbed and logistics challenges eased. Labor market dynamics improved while inventories maintained their ascent. Cooler activity resulted in a healthier balance between demand and supply.
What you will learn:
- Commodity prices declined 8% on average in July, and regional Fed and ISM surveys signaled lower price pressures. Costs will remain high in H2 2022, but we should see inflation prints start to come down as demand begins to align with supply.
Cargo ship backlogs in Southern California declined for the sixth straight month, and other modes of transport also signaled reduced stress. Shipping prices were flat or fell. Conditions are improving, but geopolitical risks continue to cast a shadow over logistics.
Labor market conditions were heartening as the economy created a robust 528k jobs, and overtime hours fell again. We look for reduced consumer demand, high costs, and lower profitability to bring worker demand and supply into greater equilibrium.
Cross Asset: Sticking with our risk on tilt as the growth outlook improves
We remain modestly risk-on as our above-consensus view on US growth this year still favours risk assets over bonds.Find Out More
Quick Take – Q4 results highlight renewed profit margin pressure
The latest results point to a broad-based decline in US profit margins in Q4, reversing a recovery in Q3. We think margins will remain under pressure this year, resulting in further EPS disappointment despite an economic soft landing and limiting the upside for equities.Find Out More
Florida economy buoyant from in-migration and real estate
Florida's economic prospects remain strong. Its wider attractions for people and business have encouraged in-migration but also put pressure on housing affordability, particularly in Miami. Tourism remains an important sector, but some metros will benefit from growth in finance, government, and wholesale trade. The Villages and Naples will see strong job growth.Find Out More