While some countries are still struggling with the pandemic, on a global scale we are witnessing the revival of supply chains with factory activity booming as the global economic recovery gets underway. PMI Indices in developed economies are all showing expansion for the first time since January as we draw to the end of April 2021 according to IHS Markit. However, purchasing managers in several economies, particularly in the developed world, note that businesses are still struggling to meet deliveries and manage costs in the face of massive shortages.
Taking A Look at the Major Economies
USA – Record highs were reached in April 2021 by US manufacturers and service providers even in the face of major supply chain disruptions that continue to affect production. IHS Markit PMI for the period rose to 62.2, which is the highest since 2009 for this time of year.
UK – As restrictions were loosened, the Flash UK Composite Output Index gained heavily in April. Demand for both goods and services was seen at 60, up from only 13.8 during the same time last year. This is also strongest increase on record since 2013.
Germany – While the Composite Index declined to 56 from 57.3 in March, it has increased by at least 300% when compared with the same period last year. Furthermore, German manufacturers are experiencing a huge surge in demand that is the best on record since 1996.
Euro Area – Orders are at record highs and the Composite Index for the region as a whole rose for a second consecutive month. However, supply chain disruptions are causing delays.
Japan – The country is seeing some expansion in growth for the first time since January 2020, based largely on the strength of manufacturing. Exports rose at the fastest pace since February 2018, though the service sector slowdown continues.
France – After eight months of declines, even France’s manufacturing and services firms have reported expansion. Again, factories and manufacturing are the driving force behind the expansion, though services too contributed.
A Common Thread
While the recovery is certainly underway in these economies and throughout much of the world, the common thread that seems to be inhibiting economic activity is delayed due to supply chain disruptions, which have become a common theme since the onset of the pandemic. While there is progress on this front, a full-scale recovery cannot be mounted until these supply chain disruptions are ironed out. Thus, that should be a focus area for businesses and governments, going forward.
