The effects of supply shortages

Supply shortages may continue to limit growth and put upward pressure on prices for several months to come before a new wave of COVID infections is brought under control, economies reopen, and spending patterns normalise. Shortages have related to both goods and labour, but in this Update we will focus on goods, answering six key questions about the shortages and their potential implications.
Jennifer McKeown Head of Global Economics Service
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Global Economics Update

Has the pandemic permanently reduced the workforce?

The pandemic is still depressing the size of the labour force in many developed countries. This probably reflects a mixture of temporary and permanent factors, so some of it may yet be reversed. But even if the bulk of the reduction in the labour force persists, this does not alter the big picture that the overall lasting damage to economies’ supply capacity has been limited considering the scale of the downturn.

19 October 2021

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

With shortages of goods and labour still dominating the news, and following our Focus research into global shortages, we have added a new page to the Global Economics Chart Book to monitor their evolution. While the global economy has continued to grow at a fairly healthy pace, businesses are reporting that shortages are limiting growth, particularly in advanced economies. Suppliers’ delivery times have continued to lengthen, backlogs of work are mounting and congestion at ports has increased. Most of the shortages should begin to ease in the year ahead, but shortages of labour could be relatively persistent. Staffing issues seem most pronounced in the US and UK, implying that the risk of sustained above-target inflation is also greatest in those economies.

14 October 2021

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Global Economics Update

PMIs show supply shortages still limiting growth

August’s global manufacturing PMIs brought more evidence of a slowdown in the sector. Growth was always going to fall back as activity approached more normal levels, but supply shortages are also playing a role. There is early evidence that the adverse effects of these shortages may have peaked: indices of suppliers’ delivery times and input prices have stopped rising, although they remain at very high levels.

1 September 2021

Global Economics Update

PMIs show growth and inflation easing a touch

The flash PMIs for August confirm that growth in developed economies is slowing from a strong pace. This normalisation was always to be expected after the rapid post-pandemic revival, but the renewed rise in virus numbers and staff and materials shortages also seem to be playing a role. The surveys suggest that price pressures are still strong, but they no longer seem to be intensifying.

23 August 2021

Global Economics Update

Five lessons from reopening so far

In this Update we identify five things that we have learned from reopening so far. Some we anticipated, including the rapid rebound in activity once restrictions were removed and an easing of trade growth as output in advanced economies resumed. But others have been more surprising, particularly the extent of supply shortages in some economies which have led us to temper our optimism about future growth.

20 July 2021
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