Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, Rand in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued the Logistics Managers' Report earlier this week. In September the Logistics Manager’s Index measured 52.4, up (+1.2) from August’s reading of 51.2. This is the second consecutive month of expansion following three straight readings of contraction from May-July.
While this is the fastest rate of expansion since February, a reading of 52.4 is still well below the all-time average of 62.9 and represents a very moderate level of expansion, the report noted. .The largest contributor to September’s expansion is our three warehousing metrics.
The rate of expansion has slowed for Warehousing Capacity (-3.4) while rates of expansion for Warehousing Utilization and Warehousing Prices (+3.1 and +7.9 respectively). Transportation Utilization moved from no change to expansion (+3.5) and a slight slowdown in the decline of Transportation Prices (+0.6).
Conversely, there was a slight increase in the contraction of Inventory Levels (-4.5) and Inventory Costs (-4.5).This second consecutive expansion provides further evidence suggesting that the move towards growth in August was not a one-off occurrence and may have marked a turning point back towards growth in the logistics industry.
The report issued the following analysis:
The latest results of the LMI summarize the responses of supply chain professionals collected in September 2023.The overall LMI is up slightly (+1.2) to 52.4, which represents a very moderate level of expansion. Moderate expansion might be an apt description of the U.S. economy overall. Labor force participation is increasing as the U.S. added 187,000 new jobs in August. While this is slightly above the pre-pandemic average from 2019, it is down from the explosive growth observed throughout 2022 and early 2023.This move towards more sustainable levels of growth may take some pressure off the Federal reserve to raise interest rates again in 2023.
Feelings of optimism continue around the U.S. economy as indicated by the University of Michigan’s consumer confidence measure reading it at 68.1 in September – up 16.2% from this time a year ago. When combined with the “Current Economic Conditions” reading of 71.4], it is clear that consumers are optimistic about the state of the economy. This optimism is partially due to the continued slowing of inflation.
Personal consumption expenditures were up 0.4% in August due to energy and fuel prices. Core inflation rose by only 0.1% over the same period[3]. Wall Street is not quite as confident, as the S&P fell more than 4% in September, making it the worse month for stock prices in 2023. This may be partially due to money moving over to Treasury bonds, where returns have increased with the anticipation that higher interest rates could stick around for longer than had been expected.
Consumer spending remained strong through the summer as well. While this provides a hope that holiday spending will increase the movement of goods, there are a few potential obstacles on the horizon in the form of the resumption of student loan payments, the UAW strike, and a potential U.S. government shutdown. While a government shutdown was avoided in the last few hours of September, the matter will likely come up again in another 45 days, which could potentially coincide with the runup to black Friday and Cyber Monday.
