Bruce Kasman is joined by Joe Lupton to discuss recently published research showing that factory output is rebounding and sending encouraging signs that the bottlenecks holding back activity are easing. Evidence is emerging from the global PMIs and a range of transportation price measures. Even more encouraging is the robust recovery gathering steam in Asia, a goods-centric region at the center of the supply chain bottlenecks, and the motor vehicles sector where global output fell 25% over the first nine month of 2021. While final demand is growing at a modest pace, the strong desire to replenish depleted inventories has pushed global factory output gains to a double-digit annualized pace in the last three months of 2021.

The evolving spread of the Omicron variant looks likely to slow this recovery and generate a significant, synchronized drag on global growth this quarter. Our view is that services will bear the brunt of the near-term drag and that it is unlikely that there will be a significant renewal of manufacturing sector supply constraints. If right, manufacturing will take the lead in global growth this quarter as inventory replenishment continues.

 

This podcast was recorded on January 12, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-3968 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.