Global Economy Affected by Pandemic Disruptions on Supply Chains

Surveys showed on Sep. 1 that global economic rebound lost momentum in August as recent pandemic disruptions on supply chains slowed down manufacturing activities worldwide.

IHS Markit reported that its global manufacturing index fell to a six-month low of 54.1 in August.

The report said that while consumer and investment spending continues to improve, rates of increase in output and employment have significantly slowed down.

Advanced economies including the United States and Eurozone reported that demand has flourished but shortages in supply and manpower continue to constrain production.

Chris Williamson, Chief Business Economist at IHS Markit, said that as Eurozone manufacturers continues to see growth, “the overriding issue was again a lack of components.”

“Suppliers [are] either unable to produce enough parts or are facing a lack of shipping capacity to meet logistics demand,” Williamson commented.

Meanwhile, Southeast Asia — a component manufacturing territory — has remained in contraction with a PMI of 44.5 in August.

Strict lockdown measures and slow vaccination rollouts in Southeast Asia have largely caused supply issues for giant manufacturers that rely on low-cost components made in areas such as Thailand and Malaysia.

“If the strict lockdown measures continue, Southeast Asia may find it hard to remain a global production hub,” said Makoto Saito, economist at NLI Research Institute.

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