New York Fed Index Shows Rising Supply Chain Pressure

The Federal Reserve Bank of New York’s Global Supply Chain Pressure Index (GSCPI) ticked up in April for the first time since its December peak.

The GSCPI, first introduced in January, integrates transportation cost data and manufacturing indicators to provide a gauge of global supply chain conditions using variables from the Baltic Dry Index, the Harpex container ship rate index, the U.S Bureau of Labor Statistics In- and Outbound price indices, and several supply chain-related components from the Purchasing Managers’ Index surveys on delivery times, backlogs, and purchased stocks.

The index provides a bird’s-eye view of potential disruptions as well as regional indicators for analyzing trade, inflation, and globalization trends across the United States, China, Japan, the Euro-area, South Korea, Taiwan, and the United Kingdom. The New York Fed announced Wednesday that it will start publishing the GSCPI as a standalone product on a monthly basis with updates on the fourth business day of each month.

April Data Indicate Worsening of Supply Chain Pressures

The GSCPI in April rose to 3.29, up from 2.80 in March, measured as the standard deviation from average. The index peaked in December 4.45.

“Despite the majority of the components of the GSCPI declining, positive contributions from China and Euro Area delivery times and United Kingdom backlogs were enough to moderately increase the GSCPI for the month of April,” the New York Fed said in a statement.

“Looking ahead, we note the potential for heightened geopolitical tensions to stoke supply chain pressures in the near term.”

A New York Fed Liberty Street Economics blog post provided some additional insight into April’s GSCPI reading.

“This estimate suggests that the moderation we have observed in recent months has been partially reversed, as lockdown measures in China and geopolitical developments are putting further strains on delivery times and transportation costs in China and the euro area. Forthcoming readings will be particularly interesting as we assess the potential for these developments to further heighten global supply chain pressures,” the blog post reads.

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