The Supply Chain Matters blog highlights a further negative drop in the New York Federal Reserve’s Global Supply Chain Pressures Index (GSPI).
Supply Chain Matters has often cited the the Federal Reserve Bank of New York’s Global Supply Chain Pressures Index (GSPI) as a recognized indicator of existing global supply chain volatility levels. This index compiles 27 different variables to include transportation movement and costs, global PMI sub-indexes reflecting delivery times and order backlog.
The index is such that a value of zero indicates pressures of normal value, positive values above zero are an indication of standard deviation above the average. Negative values reflect an indication of volatility levels falling below the average standard deviation.
The April 2023 GSPI reportedly dropped to a negative value 1.32, down from negative 1.15 reported for March, and a negative 0.29 reported for February. There have now been three consecutive months of reported negative deviation in the GSPI, with clearer signs of global supply chain volatility pressures now existing significantly below pre-pandemic levels.
Noted in the Feds April 2023 narrative were significant downward contributions from Euro Area delivery times, Euro Area stocks of purchases, and Korean delivery times. The authors further observed that there was a notable upward contribution from Taiwan stocks of purchases.
In our prior Supply Chain Matters commentary highlighting data indicating conditions of a U.S. freight and logistics recession, we called attention to reports that the Logistics Manager Index (LMI) for April reached an all-time low of 50.9, characterized as the lowest reported reading in this index’s history. The logistics industry remains hopeful in new signs indicating that retailers and manufacturers are getting closer to working off the overall glut of inventories that resulted in 2022.
This recent April data reinforce that U.S. and most global supply chains continue to deal with product demand constrained conditions, improved supplier lead and response times, and clearer evidence of manufacturing recession. Hence the very noteworthy decline in supply chain volatility. There are exceptions, most notably that of commercial aircraft supply networks that remain supply constrained amid increased aircraft demand needs.
Hence are hopes that the situation will turn more positive later this year.
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