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Supply chain calm likely to remain amid US port strike settlement
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Supply chain calm likely to remain amid US port strike settlement
Oct 4, 2024 10:33 AM

(Reuters) - The resolution of a U.S. port worker strike is likely to keep the global supply chain pressures tracked by the New York Fed on a calm footing and contributing to cooling inflation trends.

On Friday, the bank reported that its global supply chain pressure index, which measures how readings deviate from historical averages, eased to a reading of 0.13 in September. That ended a trend of rising pressures that started in April when the reading was -0.96, rising to 0.2 in August.

Global supply chain pressures have hovered right around normal or less than normal since early 2023 and their relative softness has played a key role in an ebbing of inflation that allowed the Fed to kick off a cycle of rate cuts last month. Supply chain disruptions during the onset of the coronavirus pandemic and its early stage played a key role in driving some of the highest levels of inflation seen in decades.

Progress in lowering inflation pressures had been threatened by a now concluded port strike on the East Coast and Gulf Coast of the United States.

Speaking on Friday after the release of very strong jobs data, Chicago Fed President Austan Goolsbee said on Bloomberg's television channel, "you really couldn't ask realistically for a better report for the economy, coupled with finding out that the (East Coast and Gulf Coast) port strike is not going to be an extended matter ... those are two pieces of very good news for the economy."

There had been fears among many market participants that an extended strike could once again restart the fires of inflation, which could in turn call into question whether the Fed could continue to press forward with the path of rate cuts it has penciled in.

The strike suspension removes a risk to the economy and eases the threat of "a potential near-term resurgence in supply chain disruptions and inflation," said Joseph Brusuelas, of RSM US LLP, in a note to clients.

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