Supply problems exerting upward pressure on costs in manufacturing – Capital Economics

Reviewing the latest PMI reports from major economies, Capital Economics’ Kieran Tompkins noted that shipping constraints and some goods shortages are raising costs for manufacturers. 

Key quotes

“There are some signs that these cost pressures are being passed on to consumers. Outside of the US, price pressures in services sectors are much weaker.”

“While composite PMIs did pick up in the eurozone, Japan, and the UK, they remain below 50, suggesting that output is still weak in these economies. This relative outperformance of the US economy is likely to persist as fiscal support gets ramped up later in the year. “

“Supply problems are exerting upward pressure on costs in the manufacturing sector. Where delivery times have lengthened, manufacturing input prices have risen sharply and seem to be feeding through to higher output prices.” 

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