Three years after COVID-19 was officially classified as a pandemic, global supply chains have returned, according to the Federal Reserve Bank of New York.
Supply chain pressures have disrupted nearly every industry over the last 72 months, but the February reading in the New York Fed’s Global Supply Chain Pressure Index was -0.26, its best mark since August 2019.
That number is actually even better than just back to normal. The index sets the historical average as 0, with changes in either direction representing standard deviations from that average. Negative numbers mean less supply chain pressure than average.
During the pandemic, the index reached as high as 4.31 in December 2021. The index measures together 27 variables including cross-border transportation costs and country-level manufacturing data in the Euro area, China, Japan, South Korea, Taiwan the UK and the US.
Companies are already seeing the effects of lower supply chain pressure, including Dick’s Sporting Goods.
The retailer’s stock surged after the company posted full-year earnings guidance that topped expectations. That forecast was driven by inventories the company said are in "great shape" ahead of the busy spring season.
"We were chasing inventory last year amidst industry-wide supply chain disruptions,” chief financial officer Navdeep Gupta said on an earnings call Tuesday. “...Compared to Q4 of 2019, a 38% increase in sales was well ahead of our 29% increase in inventory. Our inventory is healthy and well positioned."
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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