Supply chain woes leave companies struggling to cope

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“Supply chain delays continue to wreak havoc, leaving companies frequently unable to meet demand and pushing firms’ costs higher,” wrote Chris Williamson, chief business economist at IHS Markit, on this morning’s otherwise impressive set of data for the eurozone in his company’s closely watched PMI survey.

Costs for business and the prices they charge rose in August at some of the fastest rates in the past 20 years, the survey said, as the rate of growth in manufacturing hit a six-month low.

Similar concerns were aired in the UK PMI report, where supply chain problems on top of staff shortages left businesses struggling to meet demand. The findings were echoed in a separate report from the CBI employers’ group, which found stocks at their lowest levels in more than 60 years and said the continuing disruption could choke off manufacturing’s nascent recovery.

Although some of the UK’s problems are unique — such as the shortage of lorry drivers caused by Brexit — rising shipping costs and shortages of raw materials such as semiconductors are causing problems in supply chains across the world.

Many current logistical issues have their origin in south-east Asia, where factories that cater for western demand for goods such as smartphones have been hit by the highly infectious Delta variant of coronavirus.

Facilities in Vietnam, Thailand and Malaysia have all been hit by lockdowns, exacerbating the chip shortage. Vietnamese factories supplying companies such as Apple have even tried a “sleepover” approach to manufacturing with workers living on site, but have failed to stem outbreaks. US vice-president Kamala Harris, meanwhile, is on a tour of the region on a mission to “shore up supply lines and supply chains”.

Producing goods is just one part of the problem: transporting them is another. As we also report today, shipping companies are not only desperately short of containers, but also the ships to carry them. The number of shipyards globally has dropped by two-thirds since 2007 and those still in operation are inundated with orders after freight rates rocketed during the pandemic.

Global economy

Global economic data are increasingly falling short of analysts’ predictions and fuelling fears that the Delta variant of coronavirus will act as a brake on recovery. According to one analyst, “the tone of investor focus has shifted from reopening momentum, strong fiscal and monetary support and earnings strength to tapering talk, political uncertainty . . . China slowdown and geopolitical tensions”.

Line chart of Citi's economic surprise index showing economic indicators are falling short of Wall Street forecasts

Although official data last week showed a fall in UK retail sales, Britons are increasing their spending in bars, restaurants and entertainment venues as pandemic restrictions end. One beneficiary is London’s West End, where business is picking up ahead of the crucial pre-Christmas trading period. The capital’s office market is also showing signs of recovery, but much depends on whether people continue to work at home.

Copenhagen is the world’s safest city, according to The Economist’s Safe Cities index, followed by Toronto, Singapore, Sydney and Tokyo. The annual survey has been remodelled to reflect pandemic concerns, ranking locations on personal, health, infrastructure, digital and environmental security issues.


Pandemic Unemployment Assistance, the US government programme of temporary help for the country’s estimated 57m gig workers and freelancers, is set to end on September 6. Other jobless benefits are also set to expire, leaving millions strapped for cash at a time when Covid cases are rising again and disproportionately affecting people of colour and Hispanics — the same groups experiencing slower economic recoveries from the pandemic.

Cinema operators are hoping that the much delayed premiere of James Bond film No Time to Die in London on September 28 will help rescue them from the “existential” crisis thrown up by the pandemic. Some dream of a return to the $43bn in ticket sales reached in 2019, but others fear the rise of movie streaming has put paid to the industry’s traditional business model.

Many UK travellers have been ripped off by “cowboy” coronavirus test providers, according to consumer rights group Which? The government said it had issued warnings to 82 companies on its approved list and had completely removed 57.


The (slimmed-down) annual gathering of central bankers in Jackson Hole, Wyoming, begins on Thursday, with all eyes on US Federal Reserve chief Jay Powell for clues on when the Fed might start winding down its pandemic support for the economy. Veteran investor Mohamed El-Erian urges Powell to be bold and detail his preferred exit route to avoid any abrupt policy changes further down the road.

Trading conditions in the $22tn US government bond market, meanwhile, have deteriorated as traders brace for Powell’s speech. Liquidity in the Treasury market, which is used as a benchmark for pricing trillions of dollars of assets around the world, is at present extremely low and could lead to big price swings if Powell makes a newsworthy statement.

International banking roadshows, once deemed crucial for fundraising debt and equity, have bitten the dust during the pandemic. Virtual presentations have not only brought big cost savings but also a much quicker turnround for deals: new records were set in 2020 for both debt and equity issuance, and 2021 looks to be another record year.

Column chart of number of days between loan launch date and allocation date showing loan deals for buyouts finish faster without lengthy roadshows

Have your say

Scarlet Pimpernel comments on ‘No one wants to go back’: Covid scuttles IPO and debt roadshows:

I was a banker on these global roadshows between the mid 80s and the mid 10s. Well targeted and well prepared Q&A based one-on-ones were great then and should work now. Large group meetings are too impersonal to make a difference. The small group lunch (no more than six attendees) will also generate something interesting for all concerned. But so much can now be done or added by a well scripted/executed e-presentation with clips and C-suite interviews that . . . should provide a much more efficient platform for all concerned. Gruelling days with five to six numbing visio-roadshow conferences are not what investors want. The pendulum needs to swing back some. Clearly not all the way back.

Final thought

The FT Weekend Festival commissioned Nigerian poet Inua Ellams to write a response to John Keats’s classic work “To Autumn” to mark the 200th anniversary of his death. The animated poem “To John” exposes the damage inflicted by mankind on nature over those 200 years.

Tickets for the festival on September 4 in London are available here.

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