RSM, a tax, audit and consulting services provider, recently launched its US Supply Chain Index, which provides a near real-time and forward look at the elements of transportation, manufacturing, sales and labor that underscore the manufacturing and service sectors.
According to the release announcement posted in The Real Economy Blog: “Using a linear regression model, we found that our index is statistically correlated at a 99% confidence level with multiple major inflation indicators: the consumer price index, core CPI, personal consumption expenditures and core PCE. The result is a confirmation that supply chain disruptions are largely behind the recent surge in inflation.”
The composite index incorporates different measurements of the economy:
- Delivery times, prices paid and inventories in the manufacturing and service sectors
- Inventories held by retailers, wholesalers and manufacturers
- The inventory-to-sales ratio
- Intermodal freight traffic, which measures freight moved in trailers and containers after they are unloaded from ships
- The job openings-to-vacancies ratio
Findings show that recent bottlenecks “are about more than ships waiting to be unloaded at the Southern California seaports. The shock to the system began with the trade war in 2017 and then accelerated during the pandemic. If anything, it has exposed how the aging condition of the U.S. supply chain, which has been deteriorating for years, has profoundly hampered the U.S. economy.”
RSM also produces the US Middle Market Business Index, and the US Manufacturing Outlook Index. The latest results from the US Manufacturing Outlook show:
- The recovery of the manufacturing sector in the United States remained intact in October, with expectations for the expansion to continue over the next six months.
- Surveys of manufacturing activity conducted by regional Federal Reserve banks reported increases in new orders despite backlogs, longer delivery times, rising prices and inventories that were too low.
- Delivery times and difficulty in acquiring goods used at earlier stages of production as well as intermediate goods will most likely continue to dampen overall manufacturing sentiment despite robust demand.
Photo by CHUTTERSNAP on Unsplash
