Following the recently published PMI results, Chris Laws, supply chain specialist and Vice President of Product, Strategy, and GTM at Dun & Bradstreet, explains why businesses should remain only cautiously optimistic about the findings.
Cast your mind back a matter of weeks, and ‘Freedom Day’ had been earmarked as the day that normality would resume for British businesses – the day from which the long hard slog of COVID-19 would all be over. Yes, as of 19th July 2021, the country’s economic potential would be unleashed upon a world in want of all things made in Blighty. But, when the time finally came, it was marred by soaring coronavirus cases and isolation chaos. Not to mention the burgeoning pressures of a quietly unravelling Brexit on supply chains. And, once the initial buzz of pubs, shops, pubs, restaurants and pubs reopening had abated, fresh challenges quickly came to light: smartphone manufacturers were without the chips they needed to operate, KFC no longer had any chicken and, as quickly as it had risen, consumption once again plateaued,
With economic disruption resulting from the pandemic likely to hang around for longer than was first anticipated, the message for businesses remains the same: operate with caution in order to survive the next twelve months’ worth of fallout.
But against all odds, there are some positives – ish
Yes, despite the best efforts of a global pandemic, there have been smatterings of optimism in recent weeks. Earlier this month, the FTSE 100 opened at a standout 37 points higher thanks to a rise in employment – its best outcome since June. Meanwhile, PMI figures revealed some more encouraging news for the UK’s manufacturing sector, the upturn of which had remained solid.
But, as always, there was more: PMI’s data also showed that stretched supply chains and staff shortages were preventing the growth of output and employment in all other sectors. It’s for this reason, and others, that – despite manufacturing output rising for the fourteenth month in a row in July, and countries across Europe and the world reopening for business once more – even the positive results must be taken with a pinch of salt. And businesses shouldn’t be lulled into a false sense of security too soon.
In fact, with an increased risk of supply chain disruption already plaguing businesses because of Brexit, businesses need oversight of all things posing risk to their operations – and, in a “new normal”, that’s quite a significant task.
That’s where data can help
It’s no secret that supply chains have wreaked havoc on businesses for more than a year now. You only need to look at Milkshakegate at McDonald’s and separately Nando’s recently in the food services industry alone to know this is impacting even the most seemingly robust companies. In fact, an astonishing 99% of procurement and supply chain leaders surveyed in our recent report claim that Covid-19 has impacted their procurement processes. Add into the mix that a number of staff are still having to isolate amid the ‘pingdemic’, as well as the burgeoning pressures of labour shortages and price rises on UK businesses, companies have a lot to contend with – whether there’s a rise in consumer demand or not. After all, the effects of the pandemic will be unresolved for at least the short term and businesses the world over will likely face another uptick in inflation – however, it will be a transient one, and normal levels are expected to resume in 2022.
But, with two-fifths (40%) of supply chain professionals surveyed admitting they struggle to maintain a useful and timely view of their suppliers already, now is the time for businesses to establish a holistic view of their supply chains to protect themselves long term. And, in order to ready themselves fully for the challenges ahead, that should not only include their suppliers – but their suppliers’ suppliers too. To do so requires an investment in data and technology that improves an organisation’s transparency, efficiency and enables them to quickly pivot their operations as needed in reaction to unexpected events.
Improving business continuity planning in this way is vital to business survival over the course of the next year and should be undertaken following a solid quarter, such as the last one, rather than in reaction to a turbulent one – which could arrive who knows when.
For businesses assessing risk in real-time and making smart but cautious decisions, now is the time to hold firm and be poised to make good on an improved economic climate when the time comes.
Countering the narrative that slow economic growth is "the new normal" for America's economy, the Pacific Research Institute today released the first in a series of reports from its new study, Beyond the New Normal, which makes the case that future U.S. economic growth can meet -or exceed - past growth trends if the right economic policies are adopted.
"America's economy has been stuck in neutral for so long that some economists claim that low growth rates are now the new normal," said Dr. Wayne Winegarden, PRI Senior Fellow in Business and Economics, and co-author of Beyond the New Normal.
"History has shown that when free-market policies are embraced, America's economic engine roars. President Trump and Congress should adopt these policies that have proven successful in growing the economy and lifting more people out of poverty."
Part 1 of Beyond the New Normal provides an overview of the case Winegarden and co-author Niles Chura will present arguing that free-market policies are needed to stimulate long-term, strong economic growth in the US.
Among the key points in Part 1 of their study:
- Average family income and average household income stagnated during much of the 1970s, and since 1999. Average annual real GDP growth has averaged just 1.89 percent since 2001.
- During times of slow economic growth, other negative trends, including slower average household income growth, greater income inequality, and increased poverty, have followed. These negative trends were reversed when the economy grew at a more rapid pace.
- Strong economic growth occurs when there is a pro-growth policy environment in place that:
- Empowers the private sector to efficiently employ capital, labor, and technology;
- Discourages value destroying rent-seeking behavior; and
- Provides core public goods as efficiently as possible.
"Status quo thinking is holding back robust economic growth and keeping more Americans stuck in poverty," said PRI President Sally Pipes. "In this and subsequent volumes, Wayne and Niles make the compelling case that the President and Congress must instead embrace proven, free-market policies if we are to return America to the days of strong and sustained economic growth."
Dr. Wayne Winegarden is a Senior Fellow in Business and Economics at Pacific Research Institute. He is also the Principal of Capitol Economic Advisors and a Contributing Editor for EconoSTATS. Niles Chura is the founder of Ouray Capital.
(Source: Pacific Research Institute)
