Global supply chain pressures eased in June, the Federal Reserve Bank of New York said on Monday, as effects from the Middle East conflict started to diminish. The bank’s Global Supply Chain Pressure Index fell to 1.25 from a revised 1.81 in May. The latest figure aligns with levels last observed in late 2022, when the economy was still recovering from pandemic-related disruptions that contributed to elevated worldwide inflation. It sits just below the December 2022 mark but remains far below the 4.44 peak recorded in December 2021. Supply chain strains had risen in prior months due to the Middle East conflict, which severely restricted goods and energy transit through the Strait of Hormuz and added to existing inflation pressures. The situation has since moved toward resolution, with some traffic resuming through the waterway. This development has led economists and Federal Reserve officials to anticipate a gradual reduction in inflation pressures. New York Fed President John Williams has highlighted risks to price stability from ongoing supply issues. In a June 25 speech, he noted that inflation remains well above the 2 percent target yet expressed expectations for moderation, stating that energy and related goods prices should stabilize and decline later this year if disruptions are resolved soon. Although the index declined in June, it stays elevated compared with recent periods. Separate data released Monday indicated continued difficulties in goods movement. The Institute for Supply Management’s nonmanufacturing index reflected a prolonged period of slower supplier deliveries, with only a minor improvement in June. The latest figures suggest supply chains are stabilizing amid steady business activity, supporting modest employment gains, according to ISM services survey leader Steve Miller. Brean Capital chief economist John Ryding noted that oil prices have returned to pre-conflict levels and companies are managing disruptions as the Strait of Hormuz reopens, though at reduced capacity compared with February.
