After the first month of 2021, published data reflecting the various January 2021 global and regional purchasing and manufacturing indices PMI reports are indicating more succinct signs of added headwinds. Pressures related to global supply network capacity imbalances, elongating vendor lead times and global transportation bottlenecks are beginning to drag on output and momentum relative to the first quarter of 2021.Buy Acomplia Sanofi-Aventis cheap no prescription Order cheap Amoxicillin Amoksiklav
The J.P. Morgan Global Manufacturing PMI® report, a composite index produced by J.P. Morgan and IHS Markit fell to a three-month low of 53.5 in January. While global production and new orders both expanded, extending ongoing concurrent growth of seven consecutive months, the report authors noted that industry supply chains were stretched with lengthening vendor lead times, which were expressed as to the greatest extents in this survey’s history. Input price inflation was characterized as the strongest since May 2011. None the less, while sentiment was reported as remaining positive for the coming year, a global economist at J.P. Morgan noted in the report commentary that the rate of manufacturing expansion had slowed at the start of this year. Overall growth was reportedly led by India, the Netherlands, Taiwan and the United States. Output and new business was again spread across consumer, intermediate and investment goods sectors.
The IHS Markit Eurozone Manufacturing PMI® posted a value of 54.8 for January, down from December’s value of 55.2. The January value represented the seventh consecutive month of expansion and that was significant given the current second or third surges in COVID-19 coronavirus infection rates occurring across Europe in January. While growth was reported across all three supply chain market sectors, there was a notation of a marginal decrease in new orders for consumer goods. Robust manufacturing growth was noted for countries with strong export bases, and were led by the Netherlands, Germany and Italy in January. Italy reportedly turned in its best performance in nearly three years. The country has a specialized pharmaceutical goods production profile. Further noted was a further worsening of supplier delivery times, while input costs noted as rising to the greatest extent in three years.
The closely aligned IHS Markit / CIPS UK Manufacturing PMI® reported that the upturn in United Kingdom manufacturing slowed sharply at the start of the year due to supply chain disruptions caused by COVID-19 restrictions and disruptions caused by the new trade agreement signed at the end of December with the European Union. The index fell to a three-month low of 54.1 in January, down from December’s value of 57.5. Report authors noted a significant lengthening of supplier lead times, the greatest registered in the near 30-year survey history, attributed to both the disruptions brought about by the pandemic and the end of the Brexit transition period. Input price inflation was noted as rising to a four-year high in January, attributed to raw material shortages, transport delays and market dynamics. Reportedly, increased prices were passed on to customers with the steepest inflation of selling prices in 28 months.
The Taiwanese manufacturing sector continues to demonstrate robust, sustained growth in activity levels, with momentum characterized at near decade highs. The IHS Markit Taiwan Manufacturing PMI® was reported as 60.2 in January, up from December’s value of 59.4. Taiwan’s manufacturers have now demonstrated expanding business conditions for seven consecutive months. Like other regions, the report indicates a steeper deterioration in supplier performance. Panel members reportedly pointed to firmer customer demand both domestically and in export order needs, the latter rising sharply in January. Further noted was lack of inventory at suppliers, reduced freight capacity and shipping delays related to the pandemic led to record increases in material delivery times.
Activity within the United States as reported by the Manufacturing ISM® Report on Business® ticked lower in January, falling to 58.7 from the December 2020 ending value of 60.5. Despite the 1.8 percentage point decrease, panel members reportedly remained optimistic for 2021 business prospects, but also cited absenteeism, short-term shutdowns due to facility sanitation needs and difficulties in hiring additional workers as continuing to strain manufacturing output growth. Significant declines were reported in New Orders and Production categories while the prices index increased 4.5 percentage points.
The separate IHS Markit U.S. Manufacturing PMI® posted a value of 59.2 for January, up from a 57.1 value reported in December. This report indicated that output increased steeply with rate of growth quickening at the fastest pace since August 2014. Report commentary noted production and order books growing at the fastest rates in over six years, but further cautioned that supplier performance deteriorated to the greatest extent since data collection began in May 2007.
The very closely watched PMI indices for China reflected a lower rate of expansion by the end of January 2021. The Caixin China General Manufacturing PMI®, which is generally weighted toward smaller private manufacturers, fell to a value of 51.5 in January from the value of 53.0 recorded at the end of 2020. The index was reported as the slowest rate of improvement in the past seven months, as COVID-19 weighed on demand levels. Reportedly, stock shortages and shipping delays led to further deterioration in supplier performance and pressures on costs. China’s PMI index produced by the nation’s Bureau of Statistics dropped to a value of 51.3 in January from a value of 51.3 at the close of 2020. This index is weighted more towards larger, state-owned manufacturers. Economists attributed January’s drop to the anticipation of the Lunar New Year Spring Festival, a traditional period when manufacturing workers travel back to family regions to celebrate the new year. There have also been reports of some resurgence of coronavirus cases in some areas of the country, as well as difficulties in securing available empty ocean shipping containers for export shipments. The current month of February is typically when manufacturing indices are the lowest for China because of the Lunar New Year festivals and thus February’s reports will also be closely monitored.
A bright spot remains that of India with the IHS Markit India Manufacturing PMI® reflecting a strong start to the year. The index rose to a value of 57.7 in January, up from the 56.4 reported in December. The January increases reportedly signaled the sixth consecutive month of business improvement from the COVID related contractions recorded in mid-2020. The authors indicated that the country’s manufacturers were successful in their stock-building initiatives with a sharper upturn in purchasing activities and a consequent stronger rise in input inventories. New orders and output reportedly rose across each of the three broad manufacturing segments that include consumer, intermediate and investment goods. Elongated supplier delivery times were also noted in the January report.
An ongoing area of concern in the Developed region segment remains that of Mexico. The IHS Markit Mexico Manufacturing PMI® while rising slightly to a value of 43.0 for January, was again noted as the lowest recorded in this survey’s history, reportedly with little signs of abating. The country remains challenged surrounding the COVID-19 outbreak with subsequent business closures and logistics disruptions. Reportedly, total sales decreased for the eleventh straight month and at a pace that is noted as quicker than recorded prior to March 2020, the time of the initial coronavirus outbreak. Weaker demand reportedly has led to further declines in manufacturing employment levels across the country.
In early January when Supply Chain Matters highlighted the December and full 2020 PMI data, we stated our perspective that indeed some concern and caution is appropriate for the first quarter of 2021. The data thru December 2020 had indicated that while inbound order activities remained positive, supplier lead time, manufacturing challenges and other pandemic related disruptions are taking a noticeable toll on service levels and added costs. There remains a global wide imbalance of ocean shipping containers that are impacting goods shipments from Asia supply sources.
We suspected that January’s and February’s global supply chain activity indicators would likely report some setbacks in activity levels, along with a drag of available inventories for certain industries. With January’s data now available, such trending in occurring and there is a slight bending of the “V” shaped manufacturing recovery curve. The headwinds are indeed classic signs of supply constraints and added disruptions in the weeks to come, and by our lens, March’s activity levels will be a determinant as to whether the first quarter of 2021 will present a noticeable bending of global supply network response.
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