Global Economic Briefing_ MSSCI_ Slight improvement amidst weaker demand

Summary of Morgan Stanley Supply Chain Index Update Industry Overview - The document discusses the Morgan Stanley Supply Chain Index (MSSCI), which tracks global supply chain disruptions, shipping costs, delivery times, and backlogs. It provides insights into the state of the global economy and supply chain dynamics. Key Points 1. MSSCI Performance: - The MSSCI fell by 3 basis points (bp) in September to 0.57, down from a high of 0.67 in July 2024, but remains elevated compared to its 2024 low of 0.27 [1] - The MSSCI Supply and Demand Index (MSSCISD) declined by 4 bp to 0.29, indicating a faster decline than the MSSCI [1][3] 2. Containership Rates: - Containership rates were broadly flat for the second consecutive month, remaining over 3 times their average levels from 2019 [1] - Rates had previously risen by 156% between November/December 2023 and July 2024, with significant month-over-month growth in June (+36%) and July (+13.7%) [1] 3. Shipping Costs: - The Baltic Dry Index (BDI) rose by 15% in September to 1965, reversing a decline from August [1] - Despite the dramatic rise in containership rates since December, the BDI has not shown increased volatility and remains comparable to levels seen in October-November 2023 [1] 4. Global Manufacturing Indicators: - Global Manufacturing Delivery Times PMI fell nearly 35 bp, while Global Manufacturing Backlogs of Work decreased by 90 bp [1] - The Global Manufacturing New Orders PMI fell by 1.86 pt to 45.9, with significant declines in Korea (-5.6 pt) and China (-2.7 pt) [1] - The Global Manufacturing Purchases PMI decreased by 0.8 pt to 46.65, with the UK (-2 pt) and Korea (-1.96 pt) experiencing the sharpest declines [1] 5. Regional PMIs: - Euro Area, Taiwan, and UK PMIs worsened, while those in the US showed slight improvement [1] - Global Stocks of Finished Goods PMI rose to 50.7, while Stocks of Purchases PMI remained broadly flat globally [1] 6. Air Freight Prices: - Import air freight prices increased by 4.8% month-over-month, primarily due to a significant rise in Asian import air freight prices (+6%), while export air freight prices fell slightly (-0.7%) [1] Additional Insights - The MSSCI is a crucial indicator for understanding the balance between supply and demand in global supply chains, with the MSSCISD providing insights into the relative importance of these factors [1] - The report highlights the ongoing challenges in the global supply chain, particularly in light of declining demand PMIs and the impact on manufacturing and shipping costs [1] This summary encapsulates the critical insights from the Morgan Stanley Supply Chain Index update, reflecting the current state of the global supply chain and economic conditions.