Worldwide industrial price pressures rise: JPMorgan survey

Supply chain cost pressures and wage pressures eased, helping bring down factory cost inflation in the United States, mainland China and many other economies.

The input cost index from the survey edged higher in September, indicating a slightly faster rate of price increase, a press release from the company said.

Albeit only modest, the acceleration in price growth contrasted with slower rates of inflation in the prior four months, and leaves the index signalling persistent inflationary pressures at an elevated level. While down sharply compared to the peaks seen earlier in the year, the latest reading was among the highest seen since early 2011.

The survey's gauge of new orders indicated falling demand for a third successive month with the rate of order book loss accelerating to the fastest since April 2009, excluding pandemic lockdown months.

This cooling of demand helped alleviate supply chain constraints. The survey's supplier delivery times index showed the incidence of delays moderating in September to the lowest for two years.

A deeper dive into the reasons provided by manufacturers worldwide for their costs to have risen also suggested supply chain price pressures have moderated, as have wage pressures. But energy-fueled cost increases have risen to a survey high.

With demand for inputs falling, shipping costs have meanwhile also dropped sharply. Staff costs likewise remain an elevated factor in driving input prices higher on average globally, but September saw a welcome sign of these wage pressures cooling from August's survey record high.

Europe accounted for eight of the top 10 countries with the steepest input cost rates, with Japan also seeing especially sharply rising costs (though Myanmar once again saw the steepest rise).

The biggest month-on-month upturns in price pressures were also recorded in Europe, with the increase in the rate of inflation led by Italy, followed by Greece, Spain and the United Kingdom. Strong upturns were also seen in Myanmar, Turkey, Austria, France, Japan and Germany.

Currency weaknesses—notably against the US dollar—were often reported as having driven up import prices, though in Europe the biggest factor by far was the surging cost of energy.

At the other end of the scale, input costs fell in Taiwan and mainland China, often linked to weak demand amid ongoing COVID-19 containment measures.

While the strong dollar drove up import and energy prices in many countries, the surging greenback was notable in helping to moderate input cost inflation in the United States.

The recent slump in demand for raw materials has taken substantial pressure off supply chains, with the incidence of delays worldwide falling to the lowest since September 2020.

The most significant easing of supply chain delays was seen in Australia, but marked reductions in the number of delays were also seen across North America and the eurozone, albeit with delays worsening considerably in Spain and Italy.

The UK was also notable in seeing supply issues flare up again, often linked to port strikes and Brexit factors, but in all cases the incidence of delays remains far below prior pandemic peaks.

ALCHEMPro News Desk (DS)