Supply chain: factory production weakens due to continued supply chain constraints

(Bloomberg) — The strongest U.S. job growth in five months and firmer-than-expected worker compensation have eased recession fears, while helping pave the way for the Federal Reserve to continue to grow. significant increases in interest rates.

In Europe and Asia, factory output has weakened due to continued supply chain constraints contributing to ongoing pricing pressures. The Bank of England stepped up its fight against inflation with the biggest rate hike in more than a quarter century, while warning that the UK was heading into more than a year of recession.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World

Central banks around the world continued to raise interest rates this week. Australia, Brazil, India and the UK were among those rising 50 basis points, while Romania rose 75 basis points and Madagascar 90 basis points.

The standoff between the United States and China over Taiwan has highlighted growing risks to one of the world’s busiest shipping lanes – even a minor disruption could ripple through supply chains. Nearly half of the world’s container fleet and 88% of the world’s largest ships by tonnage passed through the Taiwan Strait this year, according to data compiled by Bloomberg.

European factory activity plunged and Asian manufacturing output continued to weaken in July amid continued supply chain complications and a slowing global economy. Purchasing managers’ indices for the four major members of the euro zone all pointed to contraction, while China, South Korea and Taiwan were the hardest hit in Asia.

WE

Employers added more than double the number of jobs expected, illustrating rock-solid labor demand that tempers recession worries and suggests the Federal Reserve will continue with strong interest rate hikes. interest in countering inflation.

Household debt rose 2% to $16.2 trillion in the second quarter as mortgages, auto loans and credit card balances all saw huge jumps, according to a Federal Reserve Bank report. from New York.

With nearly two openings for every person looking for a job, American companies are increasingly turning to high school students for skilled jobs. As a result, apprenticeship is experiencing a renaissance after failing to gain a foothold over the past few decades.

Europe

The Bank of England triggered its biggest interest rate hike in 27 years as it warned the UK was heading into more than a year of recession under the weight of runaway inflation. The half-point increase to 1.75% was backed by eight of the bank’s nine policymakers, who also delivered on their promise to act forcefully again in the future if needed.

German factory orders fell for a fifth month in June as runaway inflation and global supply disruptions continued to weigh on the outlook for Europe’s largest economy.

Germany’s presidential palace in Berlin is no longer lit at night, the city of Hanover is cutting off hot water in the showers of its swimming pools and gymnasiums, and municipalities across the country are preparing heat havens to protect people cold. And this is only the beginning of a crisis that will spread across Europe.

Asia

It’s 2025 in Beijing, five years into the pandemic, and Chinese President Xi Jinping’s Covid Zero policy is still part and parcel of everyday life. As omicron subvariants grow ever more contagious, Xi’s resolve to avoid virus deaths grows stronger – leading many experts to warn that Covid Zero could continue well beyond 2022.

Major South Korean companies are accepting the biggest wage increases in 19 years, according to a government survey, fueling fears that a wage-price spiral is taking hold in the economy. Wage settlements at companies with 100 or more workers climbed 5.3% in the first half of the year, outpacing all increases since 2003, according to a Labor Department survey.

Emerging Markets
Turkish inflation has picked up again and could be months away from peaking, reaching levels not seen since 1998 as the central bank sticks to its ultra-loose monetary course.

Brazil’s central bank raised its key interest rate by half a percentage point and left the door open for a smaller hike in September as it focuses on the outlook for inflation above a year.

–With help from Beril Akman, Maria Eloisa Capurro, Libby Cherry, Enda Curran, Arne Delfs, Vanessa Dezem, Bruce Einhorn, David Goodman, Sam Kim, Carolynn Look, James Mayger, Nic Querolo, Zoe Schneeweiss, Alex Tanzi, Kevin Varley and William Wilkes.