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Supply Chain by the Numbers

- June 2, 2023


Supply Chain by the Numbers for June 2, 2023


US PMI Falls Yet Again; Reshoring Really Gaining Momentum? EV Maker Rivian Stock Collpapse; DC Lease Rates Stay High, Despite Small Slump in Demand



That was the level of the Purchasing Managers Index for May, as released as always by the Institute for Supply Management this week. That was down 0.2 percentage point versus the 47.1 recorded in April, and also below the key 50 mark that separates US manufacturing expansion from contraction for the seventh straight month. What’s more, the New Orders Index remained in deep contraction territory at 42.6, which was 3.1 percentage points lower than the figure of 45.7 seen in April, in bad news for future US manufacturing activity. Regarding the overall economy, this May PMI indicates a sixth month of contraction after a 30-month period of expansion since June of 2020.



That is the increase in use of the word “reshoring” by S&P 500 companies in their Q1 earnings calls versus 2022, according to analysis by Bank of America. Does that mean manufacturing is really moving back to US soil? Not yet clear. However, UBS also examined the trend, with many senior executives in different sectors surveyed by the bank intending to move parts of the supply chain closer to home - 78% in Europe and 70% in the US. At a recent supply chain conference, for example, Bill McRaith, former chief supply chain officer at Tommy Hilfiger-owner PVH said that the apparel industry model of producing goods overseas and shipping them to where they’re sold is broken, with long lead times causing guesses of what will sell that are usually wrong.




That is the average rise in distribution center lease rates expected in 2023, according to a new forecast from warehouse developer Prologis this week. That despite some modest slump in demand for space. For example, real estate firm CBRE says that the national vacancy rate climbed to 3.5% in Q1. That is still very low by most historical standards, but up half a percentage point from Q4 2022. However, despite a downward trend in capacity absorption, DC rents have continued to rise. Average lease rates rose 3% in the first three months over the previous quarter, and jumped 11% versus the same period in 2022, according to CBRE. Prologis said it saw a 4.4% rise in rates for the first quarter.




That is how much share price of electric vehicle maker Rivian have fallen since shortly after its IPO in late 2021. The stock price of Rivian reached about $170 just a few days after it went public in November of 2021, but have headed down ever since, reach just $18.00 dollars or so this week. Amazon is an investor in Rivian and initially committed to buying 100,000 of the company’s electric delivery vans, but reports in March said Amazon was only meeting the bare minimum of ordering 10,000 vehicles this year, the two are renegotiating a changed to their agreement. Rivian continues to lose money, sending the stock lower. A report from JP Morgan this week said the company could get pushed out of the Nasdaq 100 Index as early as this month due to its low valuation.

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