US | October brings no relief to US supply chain strains
Our US supply chain stress tracker indicates that supply chain pressures worsened in October, after having eased in September. Preliminary data show that logistics difficulties remained the most acute source of stress while prices, activity, and labor challenges increased.
What you will learn:
- The number of cargo ships waiting to unload at LA and Long Beach hit an all time high in October. Seaborne shipping costs dropped but were still 450% above pre-Covid levels.
- Manufacturing production costs are up an eye-popping 40%-50% y/y, while the extreme imbalance between raw materials and finished goods worsened last month. The prices for services paid by producers are up 6+% y/y, a record high.
- Inventories fell less in Q3 than Q2, but the inventory-to-sales ratio remained lower at the start of Q4 than pre-Covid for 70% of manufacturing sectors.
Terms of trade will lift income but challenge Australian households
Australia's terms of trade (the ratio of export prices to import prices) increased sharply through the pandemic due to a combination of strong demand and disrupted supply in markets for Australia's major commodity exports. We had anticipated a correction in the terms of trade over 2022, but the Russian invasion of Ukraine and associated volatility in commodities markets has seen the terms of trade spike again.Find Out More
Eurozone: ECB minutes indicate that July rate hike is a near-certainty
The minutes from the April ECB meeting confirm the hawkish tilt initiated a few months ago continues to gain momentum. With a majority of the council increasingly concerned about the inflation outlook, this makes an interest rate hike already in July almost certain. This should not come as a surprise, however, as recent developments render hawks' case arguably easier to make.Find Out More