Supply Lines: Asia’s gradual healing

Supply Lines

Asia's manufacturing engines just turned in another month of fitful progress, with September's purchasing managers indexes looking just a bit brighter, with a few exceptions.

India's factory gauge surged further into expansion, while still making up for a record-low reading in April and with more challenges ahead given a worsening Covid-19 outbreak. Japan's PMI rose to the highest level since February but remained in contractionary territory.

Vietnam improved to its best in more than a year, and Thailand and the Philippines each edged higher. Indonesia brought the biggest bad news, with its gauge slumping as Jakarta reintroduced restrictions to curb the spread of coronavirus cases.

We'll get PMI reports for two bellwethers for the global rebound in trade — South Korea and Taiwan — belatedly, on Oct. 5. China's Caixin PMI is now set for release Oct. 8, due to holidays.

The PMIs followed more hopeful signs of the regional recovery, with a separate report Thursday showing South Korean exports gaining for the first time since the pandemic hit, and Wednesday's figures from China that indicate further momentum in economic activity.

For Vietnam, the manufacturing jump was overshadowed by a string of other data and developments in the Southeast Asian nation over the past 24 hours:

  • The U.S. is readying a probe into Vietnam's currency practices, people familiar with the matter confirmed — thickening the long-term plot of sticky U.S.-Vietnam relations on the sidelines of the U.S.-China trade war
  • Markets are still digesting the 50 basis-point cut in the benchmark interest rate announced Wednesday 
  • A rare economy worldwide to have escaped contraction amid the pandemic, Vietnam reported Wednesday an acceleration in third-quarter growth, while slower than expected

Still, the warning more broadly from Wall Street economists heading into the final quarter of the year is that the best is already over for a global recovery. Their conclusion: What started off as a sprint is turning into a slog.

Michelle Jamrisko in Singapore

Charted Territory

Shipowners are facing rising labor costs as widespread Covid-related restrictions limit movement of seafarers and make crew swaps more expensive. Because relieving and replacing ship workers has become so difficult during the pandemic, daily crew costs have increased 10% from January to mid-July, up to $3,144 for capesize dry-bulk carriers, according to the Baltic Exchange, a publisher of benchmark shipping rates, which traces its history to 1744. That figure is the highest since the bourse began tracking the data on a quarterly basis in May last year.

Today's Must Reads

  • Ship's ransom | CMA CGM, the world's fourth-largest container-shipping company, said it's working to restore information systems after an apparent cyberattack on "peripheral servers" hampered electronic transactions.
  • More convenience | Retail stores are ramping up all sorts of contactless options to make Americans comfortable spending this holiday season. But consumers who've gotten used to cheap at-home delivery aren't willing to give it up.
  • Chemical hazard | Britain's access to a full spectrum of chemicals after Brexit could be at risk unless safety data and regulations remain aligned with the European Union, an executive at the world's largest chemical maker said.
  • Kind of blue | President Donald Trump's tough approach with China could cost Republicans a Senate seat in Iowa, a farm-belt swing state that has been hard hit the U.S. trade war with China and Covid-19 outbreaks.
  • China crackdown | The U.S. should re-examine all aspects of its relationship with China, according to two reports issued by congressional panels in Washington. Separately, Trump signed an executive order aimed at expanding domestic production of rare-earths vital to some key manufacturing sectors, reducing dependence on China.
  • Shipments halted | The U.S. has blocked imports of palm oil and palm oil products from Malaysia's FGV Holdings, one of the world's largest producers.

On the Bloomberg Terminal

  • More coming | The Treasury Department said it will release more technical fixes to final rules on a tax break for companies exporting U.S. manufactured goods.
  • Take two | The Commerce Department must revisit, and possibly lower, U.S. antidumping duty rates on certain entries of steel pipes from South Korea, the U.S. Court of International Trade said.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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