The July LMI reading, at 68.9 (a reading above 50 indicates growth is occurring), expanded at a slower rate, and fell 2.2% from June’s 71.1, which marked the first time the LMI topped the 70-mark since March 2022’s 76.2 reading. The report’s authors observed that while this is a moderate rate of expansion relative to the last few months, July’s 68.9 is higher than any readings made at any point from 2023-2025.
Most of the LMI’s key metrics were mixed:
- Inventory Levels, at 55.0, decreased 5.5%, expanding, at a faster rate, with the report noting that it was largely driven by downstream retailers going from robustly expanding inventory levels in June, at 66.0, to contraction, at 46.3, in July;
- Inventory Costs, at 77.0, increased 1.1% from June’s 75.9, expanding, at a slower rate, demonstrating the ongoing increases in the relative costs of inventories due to tariffs and war;
- Warehousing Capacity, at 46.3, fell 1.2%, contracting, at a faster rate;
- Warehousing Utilization, at 66.1, was down 3.3%, expanding, at a slower rate;
- Warehousing Prices, at 75.5, rose 1.7%, expanding, at a faster rate, due to the lack of storage space, as well as its fastest rate of expansion since January 2025, in advance of the “anticipated tariff regime of incoming second Trump administration;
- Transportation Capacity, at 28.4, was off 2.4%, contracting, at a faster rate, matching April as the second-fastest level of contraction for this metric in LMI history, next to September 2020’s 23.8 reading;
- Transportation Utilization, at 65.0, decreased 9.7%, expanding, at a slower rate;
- Transportation Prices, at 86.9, were down 5.5%, expanding, at a slower rate, its lowest level since the start of the Iran conflict; and
- Aggregate Logistics Costs, at 239.5, fell 2.6%, expanding, at a slower rate
“The slowdown in expansion stems slower growth in Inventory Levels, which had seen a spike last year as respondents pulled inventory forward ahead of anticipated tariff increases in July,” wrote Dr. Dale Rogers in the report. “The difference is particularly pronounced for Downstream retailers, who went from robust Inventory Level expansion at 66.0 last month to contraction at 46.3. This dramatic shift may signify that the inventories that were pulled forward ahead of the holiday season are currently sitting Upstream at the wholesale level. Despite the slowdown in Inventory Levels, Inventory Costs continue to expand (+1.1) to 77.0—outstripping levels by 22.0 points and demonstrating the ongoing increases in the relative costs of inventories due to tariffs and war.
We are seeing the effects of the war, but also the tariffs have begun to bite. While we do not like tariffs much on the LMI team, the worst ones to put on would be those where they are constructed where you cannot make a deal to reduce them—the new tariffs are about forced labor and supposedly you cannot negotiate them down—and also uncertain tariffs where U.S. supply chain managers don’t know if they are permanent or not. It is an unnecessarily confusing time. This is not a political statement. It is just really confusing and hard to know how to respond.”
The report noted that despite the overall slowdown in expansion in July, the LMI reading still represents significant growth.
