Logistics Managers Index signals unusual supply chain slowdown

The Logistics Managers Index (LMI) measures monthly change across eight metrics to assist in determining whether the supply chain is holding up, whether inflation is rising, and if certain goods are becoming more expensive.

The recent LMI report started to show signs of a slowdown, which for the month of December is very unusual. Experts are not certain what the main cause could be for the slowdown, but many speculate it could be seasonality or other factors at play.

It could be attributed to waiting to hear if the U.S. Supreme Court will rule President Donald Trump’s tariffs illegal, which could alter the economy.

Dale Rogers, Professor of Business at W.P. Carey School of Business at Arizona State University, joined “Arizona Horizon” to discuss the report and what factors could be affecting the results.

“We really look at eight logistic components,” Rogers said, “…warehousing, capacity, utilization…prices… transportations…inventory levels and inventory costs, and then we calculate overall LMI.”

Rogers discussed how, in his research, he is noticing capacity is being taken out of the system. Another thing that has greatly affected the U.S. economy has been the tariffs.

“Well, the tariffs have been disastrous for the folks upstream in the economy,” Rogers said, “…even if you’re an American manufacturer…you got thousands of suppliers, and some of those have to be international, and folks are scrambling to try and reconfigure those supply chains.”

Rogers explained how there are lots of new discussions being held between the United States and various European countries.

“One of the problems is the fed can’t manage supply-based inflation, they can only deal with demand-based inflation, which is that far downstream kind,” Rogers said, “…and so as we see degradation of the upstream part of the supply chain, eventually that will roll through and affect the consumer.”