Global Macro Monitor

Source:  Visual Capitalist

The latest release from S&P Global regarding the GEP Global Supply Chain Volatility Index for July underscores a marked decrease in supplier capacity utilization, falling to a four-month low not observed since April. This downturn indicates an alleviation of strains across international supply chains concurrently with a general softening in demand across multiple regions.

Europe stands out with pronounced underutilization, driven predominantly by a manufacturing sector grappling with recessionary forces. Germany, in particular, has seen a significant contraction in factory purchasing activity, exemplifying the region’s economic challenges.

Similarly, growth in Asia has slowed, with factory demand plummeting to the lowest levels since December 2023. Chinese manufacturing sectors have notably reduced purchasing activity for the first time in nine months, marking significant economic softening. Japan’s manufacturing malaise has further exacerbated the region’s declining performance.

Conversely, North America’s supply chain utilization has seen only marginal changes from June. Nevertheless, the region is not without difficulties, evidenced by a slowdown in purchasing across the United States, Mexico, and Canada. Canada, in particular, has experienced the most severe contraction within the region, whereas earlier growth observed in Mexican factories has abated somewhat, marking the first downturn in demand since October 2023.

Despite these challenges, global supply chains have maintained a degree of operational efficiency, with negligible disturbances in stock levels, shortages, or undue price fluctuations. However, global transportation costs have escalated to a 21-month peak, largely propelled by increased expenses in Asia.

The diminished purchasing activities reflect broader economic slowdowns, prompting intensified discussions about the necessity for the Federal Reserve to reduce interest rates to bolster demand and mitigate further economic deceleration in the latter half of the year.

Overall, the July 2024 S&P Global report signals growing concerns over deteriorating economic conditions globally, with particular emphasis on critical areas such as Europe and Asia and the subsequent impact on the efficiency of international supply chains.

TOTD:  ‘Toon of the Day

The Producer Price Index (PPI) for final demand was softer than expected in July, increasing by 0.1%, following a 0.2% rise in June. Over the past 12 months, the index advanced by 2.2%. The July increase was driven by a 0.6% rise in final demand goods, particularly energy prices, which grew by 1.9%. Final demand services fell 0.2%, primarily due to a drop in trade services margins. Excluding volatile categories like food, energy, and trade services, prices increased by 0.3% in July, resulting in a 3.3% year-over-year rise.

Key Points

• July 2024 PPI Increase: 0.1% increase in the PPI for final demand.
• 12-Month PPI Change: PPI for final demand up 2.2% year-over-year.
• Final Demand Goods: Prices rose by 0.6%, driven by a 1.9% increase in energy.
• Final Demand Services: Prices decreased by 0.2%, with trade services margins falling 1.3%.
• Energy Impact: 60% of the increase in goods prices was attributed to higher energy costs.
• Notable Price Increases: Gasoline up 2.8%, with rises in diesel fuel, meats, and jet fuel.
• Exclusions Effect: Excluding food, energy, and trade services, prices rose by 0.3%, up 3.3% year-over-year.

Source:  BLS

“Google’s distribution agreements are exclusive and have anticompetitive effects,” Judge Amit Mehta of U.S. District Court for the District of Columbia wrote in his nearly 300-page court ruling.

Mehta cited Google’s exclusive distribution agreements with browser developers, smartphone makers, and wireless carriers.

The biggest partner in those deals is Apple , which receives an undisclosed percentage of Google’s ad revenue from the searches that happen on iPhones and in Apple’s Safari browser. The arrangement led to a $20 billion payment from Google to Apple in 2022, according to court filings. The number is likely larger today. – Barron’s

QOTD:  Quote of the Day

…writing is not just the output that readers consume but a process of reflection and intellectual discovery by the writer, hopefully to originate novel ideas, not just express existing ones.  – Economist