(Bloomberg) -- Global supply-chain pressures increased for the first time this year in April, with the potential for heightened geopolitical tensions to further stoke logistics bottlenecks over the near term, the Federal Reserve Bank of New York said.
The Global Supply Chain Pressure Index rose to 3.29 last month from 2.8 in March, the New York Fed said in a statement Wednesday. It peaked at 4.45 in December. The gauge brings together 27 variables that take the temperature of everything from cross-border transportation costs to country-level manufacturing data in the euro area, China, Japan, South Korea, Taiwan, the UK and the US.
The worsening snarls were predominantly driven by slowdowns in Chinese delivery times amid stringent lockdown measures to curb the spread of Covid-19, longer lead times in the euro area as Russia’s war in Ukraine hurts European supply chains, as well as higher air-freight costs from the US to Asia.
UK backlogs were also cited as adding to global supply pressures.
The measure’s components include Baltic Dry Index that tracks the cost of shipping raw materials; the Harpex that shows worldwide price development on the charter market for container ships; US Bureau of Labor Statistics data on air-freight rates and Purchasing Managers’ Index surveys.
The index is then normalized such that a zero indicates that the measure is at its average value, with positive values representing how many standard deviations it is above that average.
Spikes linked to events such as the financial crisis of 2008 and the US-China trade dispute of 2017-18 “pale in comparison to what has been observed since the Covid-19 pandemic began,” New York Fed researchers Gianluca Benigno, Julian di Giovanni, Jan J. J. Groen, and Adam I. Noble -- who developed the gauge -- said in January.
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