Research Briefing | Aug 10, 2022

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.

Chart: Supply chain pressures eased through mid-year
Back to Resource Hub

Related Services

The-enduring-appeal-of-US-Treasuries-to-Japans-investors

Post

The enduring appeal of US Treasuries to Japan’s investors

Some market participants are raising concerns over a fall in demand for US Treasuries from Japanese investors amid higher domestic yields. But we think that there will continue to be a large and stable investor base in Japan for US Treasuries due to the still-large yield gap. Also, uncertainty over the Bank of Japan's monetary policy is dissuading investors from increasing their holdings of Japanese government bonds.

Find Out More

Post

Prospects for policymaking in a divided government

We subjectively assign a greater probability of a divided government after the 2024 elections rather than one that is fully controlled by Republicans or Democrats. After considering the prospects for policymaking under a Republican trifecta, we modeled the macroeconomic impact of a divided government with either of the two leading presidential candidates at the helm.

Find Out More

Post

Why dollar strength looks set to go on

The strength of the US dollar looks likely to continue this year and into 2025 before possibly waning in 2026, according to our analysis. Relatively robust US growth, favourable interest rate differentials, and structural improvements to the US balance of payments are all dollar positives.

Find Out More