1H 2018 in Supply Chain in Numbers and Charts
It is a big time cliche, but a picture really is worth a 1000 words.
I can say that definitively, because when I put together these reviews of the past year or half year in supply chain, the graphics I use really do tell the story - wish I had room for more.
Last week, I provided a month by month chronology of the top stories for the first six months of 2018, which you will find here: What Happened in Supply Chain in 1H 2018?
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Spot market load availability set a record in June, increasing by 9.3% month-over-month and 18% compared with June 2017, according to the DAT Freight Index.
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This week, I am back with a look at the 1H in what I call numbers and charts. So let's go.
In an important change, the economic environment that has such a big impact on our supply chains went from lukewarm in the 1H in 2017 to what seems to be the strongest economy in many years.
Q1 real GDP growth came in at a so-so 2%, but that was up from Q1 2017's rate of just 1.4%, as Q1 numbers have been weak for many years running for reasons economists can't explain.
But the Q2 numbers, soon to be released, are expected to be better - perhaps much better. The Federal Reserve Bank just said that growth in the second quarter was "considerably stronger than the first."
Could we see the first year of real GDP growth for the first time (amazingly) since 2005? Looks like that is a real possibility, which would end a longer stretch without that level of growth than has been seen for decades (I checked back to 1950) and perhaps in the history of the US, at 12 years running.
The IMF's just released forecast predicts overall global economic growth of 3.9% for both this year and next, up a bit from 2017 (3.7%). It expects as usual developing economies (4.9%) to grow much faster than developed ones (2.4%). The IMF, however, is also concerned rising trade wars could cut those expected growth levels.
The IMF also predicts global trade growth of 4.5% for 2018, notably above its forecast for global economic growth. That is back to how it was from the 1990s until the Great Recession. Then something changed, and global trade fell below GPD growth, playing havoc on ocean carriers which had loaded up on capacity.
eCommerce rolled on, up 16.4% in the US in Q1, the last data point from the US Commerce Dept., and 16.8% in Q4 2017, as the growth rate stays 14-16% quarter after quarter, much faster of course than brick and mortar retail growth. But total retail sales were up a solid 4.9% through June, though that number includes restaurant sales. Still, good news for brick and mortar.
US manufacturing once again provided some mixed signals. The US Purchasing Managers Index from ISM was largely on fire, well above the 50 mark that separates manufacturing expansion from contraction in each month of the 1H, with June's 60.2 illustrating the economic strength seen it appears in Q2 (see graphic below).
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But as was true last year, the data coming from the US Federal Reserve on US manufacturing output was less positive, showing basically flat output for most months, as show in the graphic below. June's for production level, for example, was up a modest 1.9% versus the prior year. I do not know how to reconcile the difference between what the ISM and Fed data say. And at a level of 103.9, it means June output was up just 3.9% from the baseline year of 2012, six years later.
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