Shift Happens

Image source: Nuntiya sripongpun - Shutterstock

What's going on?

Data out on Friday showed that activity in France and Germanys manufacturing sectors declined in October, as the countries clock off early while theres still work to be done.

What does this mean?

France and Germanys manufacturers are stuck in a vicious cycle these days. There arent enough parts and materials to go around, which either means they have to fork out extra or cant make the products they need, period. And while they can pass any higher costs on, thats only been encouraging their customers to delay or cancel their orders. Thats left manufacturers with no choice but to cut down production, creating even more shortages. All this has taken a particular toll on France and Germany: October data showed that manufacturing activity in Europes two biggest economies has fallen to its lowest level since the start of the pandemic.

Why should I care?

The bigger picture: There might not be a right move.
The European Central Bank which is set to meet next week is under more and more pressure to curtail rising prices by raising interest rates. But some economists are worried that any rate hikes could end up slowing down the regions recovery even more, if not derail it completely. If the central bank was hoping for data thatd make its decision easier, then, this aint it.

Zooming out: No ones safe from shortages.
Even social media companies are feeling the effects of supply chain issues: Snapchat warned last week that advertisers are spending less on the platform since they cant get their hands on products to sell in the first place. Well, that and the fact that Apples stringent new privacy settings are forcing companies to rethink their ad strategies altogether. That might be why investors sent its stock down 25%, and why Facebook and Twitter both of which are set to report their earnings soon saw theirs fall too.

Originally posted as part of the Finimize daily email.

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