LMI October Index shows 11th consecutive month of expansion

The Logistics Managers’ Index recently released its October data, which saw the 11th consecutive expansion of the overall index – the highest level since September 2022. The overall index rose 0.3 points from September to 58.9 points, buoyed by expansion in transportation pricing, whose increase of 5.7 points from September to 64.1 was the largest rate of growth since May 2022. The LMI is a diffusion index, meaning a reading above 50 signals expansion, while a reading below 50 indicates contraction.

Compared to last month, transportation capacity was similar, up 0.8 points from September to 50.8 points for October. While the movement was slight, a more granular examination showed a larger swing between the first and second half of the month. The report notes, “Transportation Capacity actually contracted in the first half of October (45.8) before expanding again later in the month (54.3). It will be interesting to see if capacity continues to loosen in November or if it moves back towards no change.”

The report adds that it will be worth watching whether transportation capacity continues to loosen into November or if there is no change, as there is a scenario in which, if transportation prices continue to rise, “more idle capacity will come off the sidelines to take advantage of the increased opportunity, leading to the somewhat counterintuitive situation that we now find ourselves in where both Transportation Prices and Capacity are increasing.”

The report continues, “All of this suggests that the market is turning, just more slowly than carriers would prefer. The reason for this slower turn is that there is more excess capacity in the system than we would normally have.”