May US Logistics Manager's Index 59.4, 2 straight months of expansion

This represents some stabilisation after hitting a seven-month low in March at 57.1 immediately after February’s nearly three-year high reading of 62.1.

This is up by 3.8 points from 55.6 a year ago, and up by 12.1 points from 47.3—a contraction—in May 2023.

The May increase is largely driven by increased costs, as movements in inventories have slowed significantly compared to observations from earlier in the year, according to an official release.

Smaller firms were a more significant driver of logistics activity, reporting an overall LMI reading of 63.1, which is statistically significantly higher than the 56.2 reported by their larger counterparts.

Similar to April, May’s readings were driven by the somewhat confounding forces of slowing (minus 5.5) inventory levels, which at 51.5 were on the edge of no change, and costs increasing across the board.

This is epitomised by inventory costs that were up by 2.8 points to 78.4, their highest level since October of 2022 when firms were struggling with the end of the inventory bullwhip that resulted from the COVID build-up.

The 26.8-point gap between the two inventory metrics is the third largest in this history of the index.

This suggests that the inventories that were rushed into the country earlier this year are now static and holding them is expensive.

This build-up is clearly reflected in available warehousing capacity, which is down by 5.4 points to 50 and no movement.

Warehousing prices (minus 0.2) read in at 72.1, reflecting the lack of available capacity.

The three transportation metrics held relatively steady in May, with none of them moving more than 0.9-points from their readings in April. This steady state involves transportation capacity (54.7) that is tight, but not too tight, anemic expansion in transportation utilisation (52.6, the lowest reading since November 2023), and moderate expansion in transportation prices (63.1).

The LMI score is a combination of eight unique components that make up the logistics industry: inventory levels and costs; warehousing capacity, utilisation and prices; and transportation capacity, utilisation and prices.

Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued the LMI report.

ALCHEMPro News Desk (DS)