Home ยป Global supply chain stress at 18-month low in July, NY Fed’s index shows

Global supply chain stress at 18-month low in July, NY Fed’s index shows

Stress on global supply chains eased in July to the lowest level since
January 2021 as port congestion and other snags eased, the New York
Federal Reserve reported on Thursday, in its latest update to a
worldwide index of supply problems.

It was the third straight month of declines an encouraging sign for
U.S. Federal Reserve policymakers who are keen for supply chain issues
to ease in order to help tame inflation, which is running at a
four-decade high in the world’s largest economy.

The regional bank’s Global Supply Chain Pressure Index incorporates
data on shipping costs, delivery times, backlogs, and other statistics
into a single measure compared to historical norms.

The index is now down more than 50% from last December’s record high,
but it still remains well above levels seen just before the start of
the COVID-19 pandemic.

Thursday’s data tallies with a survey published earlier this week by
the Institute for Supply Management, which showed a measure of the
speed of U.S. supplier deliveries also improving.

On a global level, a supplier delivery times index from S&P Global and
JPMorgan shows delays have let up significantly this year. The index
in July was the highest since November 2020, with higher readings
indicating better delivery performance.

Supply chain issues have become a key issue in the global recovery
from the pandemic, and in the efforts of the Fed and other major
central banks to quash inflation. They intensified earlier in the year
as coronavirus lockdown measures in China and the war in Ukraine
lengthened delivery times.

Analysts at Morgan Stanley in Asia used the New York Fed index as a
building block for their own tracker of supply chain pressures in
China. That index had eased for a second month through June,
supporting their view that non-commodity producer price indexes have
already eased off their highs.

“They expect the downward trend to continue, easing import prices
elsewhere in the world, especially for the U.S.,” Morgan Stanley said
in a note.

The U.S. central bank and some other institutions have already begun
to move swiftly and raise interest rates in an effort to dampen demand
for goods and services while hoping supply chains untangle in order to
bring economies into better balance.

Leave a Reply

Your email address will not be published. Required fields are marked *