Reflationary recovery races on

Inflation indicators in the flash PMIs for June reached new record highs and supplier delivery times lengthened still further. However, outside the US at least, there are few signs that goods shortages and higher costs have held back the recovery in manufacturing output. More generally, the PMIs suggest that lockdown easing continues to propel recoveries in the US and Europe, where restrictions have eased.
Simon MacAdam Senior Global Economist
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Global Economics Update

Indeed Job Postings point to shortages intensifying

We think that Indeed job data are useful and timely indicators of labour demand, and we will continue to monitor them in the months ahead. The latest data support the view that labour shortages are rising, and are most acute in the US, Australia, and Canada.

18 October 2021

Global Economics Chart Book

Shortages limiting growth and boosting inflation

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14 October 2021

Global Inflation Watch

Shortages skew inflation risks to the upside

Inflation is set to stay higher for longer than we previously envisaged due to surging energy prices and goods shortages. The boost from energy will go into reverse next year due to base effects and lower oil and gas prices. Goods shortages are worsening and will persist for some time given lean inventories, pandemic-related shutdowns in Asia, and strong demand for imported goods. These pressures should start to ease next year. But there is a risk that the shortages trigger a more persistent pick-up in price pressures, particularly when labour is also in short supply. Staff shortages are most pronounced in the US and intensifying rapidly in the UK and Canada. In all, while we expect inflation to ease back to below target in the next couple of years in Japan and Europe, it will settle at higher rates in the US.

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Recovery in world trade continues, for now

April’s data revealed that world trade flows have enjoyed virtually interrupted growth for 12 months now, with world trade remaining well above its pre-virus level. But between the quintupling of shipping costs over the past year, supply disruptions, and a potential cooldown in the demand for traded goods as economies re-open, there is no shortage of impediments to a continued robust recovery.

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How much of the rise in inflation is due to ‘base effects’?

Much of the rise in inflation in major advanced economies from February to May has reflected the fact that prices fell in the same period a year ago. That said, depending on how you measure it, around half of the jump in inflation in the US and UK over the past three months has reflected a ‘genuine’ pick-up in For the most part, base effects are unlikely to be a significant driver of inflation in the year ahead.

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Global Economics Update

G7 tax deal encouraging sign for cooperation among DMs

The direct implications of this weekend’s deal on global corporate taxation struck by G7 finance ministers will be limited. But the deal suggests that wealthy nations have found renewed determination under a Biden presidency to cooperate on global issues, which may pay dividends in other areas in years to come.

7 June 2021
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