US inventory metrics now settling into more sustainable growth rates

The November US logistics managers’ index reads in at 53.6, down by 3.9 from October’s reading of 57.5. This is the third month out of the last four that the overall index has read in below 60. It is also the second lowest overall reading in the history of the index, only surpassing the reading of 51.3 from April 2020 at the height of COVID-19 lockdowns.

In a change from what researchers from leading logistics and supply chain schools who conduct the survey have observed throughout 2022, inventory metrics in the United States are now settling into more sustainable rates of growth.

The November US logistics managers’ index reads in at 53.6, down by 3.9 from October’s reading of 57.5. This is the third month out of the last four that the overall index has read in below 60. It is also the second lowest overall reading in the history of the index, only surpassing the reading of 51.3 from April 2020 at the height of COVID-19 lockdowns.

Inventory levels have decreased significantly, particularly for upstream respondents. This is likely indicative of goods being positioned downstream for the holiday season, and more importantly for supply chains, being purchased by consumers.

Despite the reductions in inventories, warehousing capacity remains tight, which in turn ensures continued expansion in warehousing prices.

On the flipside, the transportation market continues to fall from the dizzying heights that had become the norm during 2021.

Researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued these information recently.

The slowdown in the overall index is largely due to the long-anticipated wind down in inventories. The inventory levels metric, which came in over 80 in February, reads in at 54.8 in November, down significantly from October’s reading of 65.5.

This is indicative of two things: the movement of goods downstream towards retailers, and the sale of those goods as holiday spending picks up.

Spending growth remained strong to kick off the holiday season. Online consumers spent just over $35 billion during the period from Thanksgiving to Cyber Monday.

Respondents seem to expect a meager rate of expansion over the next 12 months, predicting a growth rate of 51.5, down from October’s future prediction of 55.2. The weak levels of expansion are pulled down by expected contractions in both inventory levels and transportation prices.

Fibre2Fashion News Desk (DS)