The Federal Reserve Bank of New York said Monday that global supply-chain tensions moderated in June, as measured by its Global Supply Chain Pressure Index. The indicator fell to 1.25 for June, down from a revised 1.81 in May.
The June level aligns with readings last observed in late 2022, a period when the global economy was still adjusting to disruptions stemming from the COVID-19 pandemic. While the current figure sits just below the December 2022 reading, it remains far lower than the index peak of 4.44 recorded in December 2021.
Recent months had seen a rise in supply-chain pressures related to disruptions emanating from the Middle East war. Those disruptions brought goods and energy transit through the Strait of Hormuz to a near standstill, a dynamic that contributed to rising inflation.
According to the New York Fed, the conflict is now in the process of being resolved and some maritime traffic has returned to the waterway. That partial restoration of transit has led economists and Federal Reserve officials to anticipate that inflationary pressures tied to supply constraints will decline over time.
New York Fed President John Williams has pointed to supply-chain difficulties as a risk to price stability. In a June 25 speech, he said, "inflation is unquestionably elevated and well above" the 2% target.
The New York Fed's index provides a quantified view of global bottlenecks by aggregating a range of shipping, manufacturing, and trade indicators. The June decline signals an easing of the acute pressures that had pushed the index higher in recent months, though it remains above zero and therefore still indicates some degree of strain.
For policymakers and market participants, the slipping index offers a data point suggesting that the specific supply shocks tied to the Strait of Hormuz have diminished, and that those shocks had been a factor behind recent upward pressure on prices. At the same time, officials such as Williams continue to emphasize the persistent upside risks to inflation posed by supply disruptions.
Overall, the New York Fed's update for June shows an environment in which supply-chain stress has receded from recent highs but has not completely returned to pre-crisis norms.