U.S. supply chains expanded in June, driven primarily by continued resilient consumer spending despite high inflation, according to the June Logistics Managers’ Index (LMI) from researchers at Florida Atlantic University, Arizona State University, Colorado State University, Rutgers University, and the University of Nevada, Reno.
The June LMI read 71.1, a slight increase from May’s 69.5. It marks the fastest rate of expansion, and the first reading above 70 since March 2022.
“In addition to the prepositioning of inventory for back to school and the holiday season, the push in inventory may also be to mitigate future tariff increases, and lock in pricing before any hikes take effect,” says Steven Carnovale, associate professor of supply chain management in FAU’s College of Business.
Key takeaways:
· June’s expansion was largely driven by increased inventory levels among larger respondents and downstream retailers, and by greater pressure on warehousing utilization, warehousing prices, and transportation utilization.
· Consumer spending has remained resilient despite elevated inflation and slower job growth, giving retailers greater confidence to replenish inventories ahead of the back-to-school and holiday shopping seasons.
· Firms are now relying on proactive inventory investment rather than on a defensive inventory management strategy. Warehousing capacity is tightening as utilization and prices continue to rise. Transportation sectors remain elevated, as strong freight demand puts upward pressure on prices and utilization.
· Looking ahead, respondents expect the U.S. supply chains to expand over the next 12 months, though much of that remains uncertain due to limited capacity and ongoing trade policy uncertainty.
