Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

SOMETIMES investing is making the links between apparently unrelated things. Here are three:

  • A friend at the golf club says he’s getting his HGV licence because there’s such a shortage of lorry drivers that he can earn significantly more than in his current job.
  • McDonald’s warns that it is out of milkshakes, while KFC and Nando’s are running short of chicken.
  • There are 350 ships lying at anchor, waiting to get into the world’s ports

The connection? Creaking supply chains. What might it mean for us as investors? Rising input costs, margins under pressure, inflation.

There’s a common theme running through this week’s economic data releases and the company results announcements in the recent second quarter earnings season. Things that businesses took for granted - like finding workers, and access to supplies - can no longer be relied on.

The UK’s economic recovery slowed in August as staff shortages and grit in the supply chain left many businesses struggling to meet rising demand. The composite purchasing managers’ output index fell to 55.3 from 59.2 - worse than expectations and the lowest in six months.

Companies are suffering from the combined impact of Brexit, the ‘pingdemic’, shortages of raw materials and soaring transport costs. The cost of a shipping container is five or six times higher than at the beginning of the year.

It’s the same story across the Atlantic. US business activity slowed for the third month in a row in August. Shortages of raw materials and labour are holding back output and pushing up inflation, according to IHS Markit, which compiles the figures.

After two quarters of growth above 6%, consecutive growth not seen since the 1980s, Goldman Sachs economists this week slashed their forecast for third quarter GDP growth in the US from 9% to 5.5%. Consumer prices are, meanwhile, rising at more than 5% a year.

Back on this side of the pond, business activity in Europe is still strong. The same PMI data was close to a 15-year high. But here, too, companies are struggling to fill empty positions and keep up with rising input costs.

This is a new experience for many investors. Recent decades have seen low wage growth and tepid price inflation as the world has absorbed a surplus of workers and too many rather than too few manufactured goods.

One of the unexpected consequences of the rebound from the pandemic is a change in the economic weather. The world we seem to be moving towards looks a lot more like the pre-globalisation 1970s than more recent decades.

When we caught up with James Thomson, manager of the Rathbone Global Opportunities Fund, recently, he flagged up these trends as key themes in how he is shaping his portfolio. See how James is navigating the new world of seized-up supply chains:

Read more about Rathbone Global Opportunities and other Select 50 funds here.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. The Rathbone Global Opportunities fund invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates. The fund invests in a relatively small number of companies and so may carry more risk than funds that are more diversified. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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