The Federal Reserve Bank of New York said Monday that supply chain strains increased in March, according to its latest Global Supply Chain Pressure Index (GSCPI).
The New York Fed reported the index at 0.68 for March, up from 0.54 in February. By the index's own scale, a reading of zero corresponds to normal levels of supply pressures, while a positive value signals mounting pressure in global supply chains.
The bank did not provide an explicit explanation for the March rise. The release states the uptick is almost certainly related to disruptions tied to the war in the Middle East that was started by the U.S.-Israeli attacks on Iran. The GSCPI reading in March is noted as reaching levels last seen at the start of 2023.
Even with the month-to-month increase, the recent reading is considerably lower than the extreme stresses recorded during the pandemic. The GSCPI reached 4.49 in December 2021, a period the release characterizes as one in which COVID-19 related pressures were bearing down on the global economy.
The data release provides limited attribution beyond the brief note regarding the Middle East disruptions. That lack of detailed explanation leaves uncertainties about the breadth and duration of the recent rise in supply pressures.
Context and implications
The New York Fed's GSCPI offers a snapshot of aggregate supply-chain strain using a composite of indicators. In March the index moved modestly higher, signaling a return to pressure levels seen at the beginning of 2023 while remaining distant from the December 2021 highs driven by COVID-19.
Because the Fed did not supply a full causal breakdown, the scope of market and sector impacts is not specified in the release. Observers and market participants are likely to monitor supply-sensitive areas for any follow-through from the rise in the index.
Note: The New York Fed's statement and the numerical readings above are the extent of the information provided in the release; no additional explanations or data were included.