Air cargo rates now jumping/Mfr'g still in contraction/Earnings comments/Eurozone economy still not growing

The spillover from the spike in sea container costs and disruptions caused by the Red Sea attacks resulted in a 6.4% rise in the Baltic Air Freight Index w/o/w as shippers move to air for some goods. The caveat is that some of this increase could be related to the rush to ship ahead of the China New Year holiday. We'll see to what extent next week. 

The January Dallas manufacturing index seen yesterday reinforced the contraction that is still going on in global manufacturing as it fell to -27.4 from -10.4. The estimate was -11, the deepest below zero since last May and it hasn't had a plus sign in front since April 2022, almost 2 years ago. Also of note was the 6 month outlook which was negative for a 6th straight month. 

Here are some notable comments with most citing the challenging conditions:

Food Mfr'g, 

"Stagflation, increased commodity costs, labor costs and benefits to retain talented staff, political upheaval, border failure and dysfunction at the regulatory level are issues affecting our business."

"Current macroeconomic conditions are not encouraging. After a busy 4th quarter, the start of 2024 has been slower than planned. My view of 2024 has not changed. I had thought 2024 would be a good year, but I see signs of trouble ahead, which will be disruptive."

"Demand feels weak right now."

"We are seeing increased stability in demand for our products, which is a change from a year ago when we saw a dramatic decline in our super-premium items. It feels to us like consumers are more comfortable this year than last year. Interest rate increases have stopped for the moment, which may have an impact on their attitude. We are seeing moderate growth this year, which is a good sign for us."

Textile Product Mills,

"January has been a slower month for sales relative to December (to be expected) and y/o/y (which was not expected). We are also seeing increasing lead times for the inventory and delays at the ports, which we've not seen or experienced in several months. Overall, uncertainty is high, and I'm feeling less optimistic than I did last quarter."

Paper Mfr'g, 

"The improvement is slight but measurable."

 Plastics and Rubber Products Mfr'g,

"The current state of the oil market is slowing. This is resulting in a noticeable reduction in new orders. The first and 2nd quarters of the year will be challenging." Likely in response to lower rig counts is my guess.