US | Supply chains started the new year under duress

Our US supply-chain stress tracker suggests 2022 commenced with continuing pressures. Transportation channels remained strained in January, and inflation stayed high. Constraints eased on the activity front, but we believe this positive news will be short-lived since unfilled orders are still running at historic highs. The employment data confirm the labor market was very tight, while inventory dynamics didn’t significantly change last month.

What you will learn:

• Los Angeles and Long Beach port backlogs subsided slightly, but data for the San Pedro Bay don’t fully reflect the latest developments since shippers diverted some cargo to other US ports. An uptick in shipping costs, historically high air freight volumes, and minimal excess trucking capacity signal that high logistics stress carried over into 2022.
• Wholesale services inflation likely hit an all-time high, above 8% y/y. Cost pressures also stayed elevated for goods producers, with the inflation rate for raw materials used in durables manufacturing up around 50% y/y and the cost of raw materials used in nondurables manufacturing up almost 30% y/y.
• Faster wage growth, greater overtime hours worked, and elevated job openings indicate the labor market was very tight.