Business inventories are finally rebounding, a sign of a healing supply chain
Business inventories are finally rebounding, a sign of a healing supply chain
About this time last year, businesses found themselves with too much inventory on the shelves as consumers pulled back on spending. Since then, businesses have been trying to whittle down that excess inventory.
But in December, inventories finally hit pre-pandemic levels, according to the Logistics Managers Index. And in January, inventories actually expanded. That’s a sign that supply chains have gotten a lot healthier.
A big problem with supply chains during the pandemic was that things were stagnant. Ports were backed up. Inventory wasn’t moving. But recently that’s been changing.
“While the flow of inventory and goods is not completely back to normal, it’s much better than it was a year ago or two years ago,” said Dale Rogers, a professor at Arizona State University who helps put together the Logistics Managers Index.
He also said transportation costs have been falling more slowly, which indicates that demand for transportation is picking up.
“If you’re looking for hopeful signs in the economy, I think we are seeing those,” Rogers said.
That’s because busier supply chains are a sign that businesses are trying to meet robust consumer demand, said Weston LaBar, Head of Strategy for the freight broker Cargomatic.
“Consumer spending continues to remain pretty solid,” LaBar said. “They may be buying different things. They may be buying it in different ways. But they’re still buying.”
That robustness in spending is a sign that the economy is looking less like it did during the pandemic and more like it did in 2019.
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