Manufacturers worldwide reported further improvement to supply chains in March, indicating a gradual alleviation of disruptions caused by recent global events. The Global Manufacturing PMI, sponsored by JPMorgan and compiled by S&P Global, revealed that the time taken for factories to receive goods from their suppliers shortened on average during the month.
The slight improvement in supplier delivery times is a positive development, signaling a reduction in supply constraints after disruptions related to recent events in the Red Sea. This improvement comes after a period of lengthening delivery times globally, particularly in regions like the UK, which were most affected by the disruptions. However, even in these regions, the extent of delays eased compared to previous months.
While supply chain improvements offer relief in terms of the global inflation outlook, challenges remain. Although average input costs continued to rise globally for the eighth consecutive month in March, the rate of inflation moderated slightly. Companies attributed the main upward pressure on selling prices to factors such as shipping and wage costs, which eased during the month. However, consumer goods producers reported steep growth in input costs and selling price inflation, indicating potential challenges ahead.
There are also notable geographical divergences in price trends. The US saw the largest price spike among major economies, with inflation reaching an 11-month high. Japan and the UK also experienced notable increases in selling price inflation, while prices fell in regions like the eurozone and mainland China.
As new orders growth picks up worldwide, there may be further challenges related to demand-led pricing power in the coming months. Despite improvements in supply chains, the impact on global consumer price inflation could be significant, particularly in light of rising input costs for consumer goods producers.
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