DEMAND AT ASIAN FACTORIES RISES AT STRONGEST RATE IN OVER 2 YEARS, IMPROVING NEAR-TERM GROWTH OUTLOOK FOR MANUFACTURING WORLDWIDE: GEP GLOBAL SUPPLY CHAIN VOLATILITY INDEX
- None.
- None.
- North American suppliers struggling to meet orders due to a lack of staff
- Manufacturing recession in
Europe eases in March, but steep downturn inGermany remains a major drag on the continent - Despite Red Sea and Panama Canal disruptions, transportation costs and stockpiling fell in March because of decreases in container rates
Continuing the year-to-date trend, demand for raw materials, commodities and components continued to recover in March. Notably,
Notably, North American suppliers experienced difficulties in meeting orders, as backlogs of work due to a lack of staff increased. This suggests a strong pipeline of orders for the coming months.
In
Global transportation costs fell to their lowest level since last December as the diminishing impact of the Suez Canal disruption led container rates to decline. Our data shows no discernable impact to the world's supplies from either the Red Sea attacks or from reduced capacity on the Panama Canal, as businesses adjusted to longer delivery schedules.
"In March, orders placed with
Interpreting the data:
- Index > 0, supply chain capacity is being stretched. The further above 0, the more stretched supply chains are.
- Index < 0, supply chain capacity is being underutilized. The further below 0, the more underutilized supply chains are.
MARCH 2024 KEY FINDINGS
- DEMAND: Global demand for raw materials, commodities and components edged closer to its long-term average in March, signaling recovery in the global manufacturing industry.
Asia was the primary driver of this positive trend, with purchasing activity across the region rising at the strongest pace in over two years. - INVENTORIES: There was a sharp reversal in global businesses' inventories in March, partly reflecting the winding down of surpluses built up because of the Red Sea disruption. Reports of safety stockpiling were at their lowest since November 2019, before the pandemic.
- MATERIAL SHORTAGES: Reports of item shortages remained among the lowest seen in four years.
- LABOR SHORTAGES: There continued to be evidence of growing staffing capacity constraints in March, particularly in
Europe andNorth America , as global reports of manufacturing backlogs rising because of labor shortages were their highest since last August. - TRANSPORTATION: Global transport costs fell to their lowest in the year to date in March as the impact on supply chains from the Red Sea disruption receded.
REGIONAL SUPPLY CHAIN VOLATILITY
NORTH AMERICA : Index fell to -0.31, from 0.17, signaling a renewed increase in spare capacity following the uptick in pressure in February. This reflected a reduction in inventories, alleviating some strain on the region's vendors.EUROPE : Index fell to -0.62, from -0.41. Albeit down on the month, the index is much higher than it was at the end of 2023. Still, recession inGermany's manufacturing economy is weighing on the continent.U.K. : Index rose further in March to -0.17, from -0.34, its highest level in a year and signaling a shrinking amount of spare capacity across theU.K.'s supply chains.ASIA : Index little-changed at -0.07, down only narrowly from -0.02. Overall, the index points to Asian suppliers operating at close to full capacity as regional input demand grew at the fastest pace for over two years.
For more information, visit www.gep.com/volatility.
Note: Full historical data dating back to January 2005 is available for subscription. Please contact economics@spglobal.com.
The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, May 13, 2024.
About the GEP Global Supply Chain Volatility Index
The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP. It is derived from S&P Global's PMI® surveys, sent to companies in over 40 countries, totaling around 27,000 companies. The headline figure is a weighted sum of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators compiled by S&P Global.
- A value above 0 indicates that supply chain capacity is being stretched and supply chain volatility is increasing. The further above 0, the greater the extent to which capacity is being stretched.
- A value below 0 indicates that supply chain capacity is being underutilized, reducing supply chain volatility. The further below 0, the greater the extent to which capacity is being underutilized.
A Supply Chain Volatility Index is also published at a regional level for
About GEP
GEP® delivers AI-powered procurement and supply chain solutions that help global enterprises become more agile and resilient, operate more efficiently and effectively, gain competitive advantage, boost profitability and increase shareholder value. Fresh thinking, innovative products, unrivaled domain expertise, smart, passionate people — this is how GEP SOFTWARE™, GEP STRATEGY™ and GEP MANAGED SERVICES™ together deliver procurement and supply chain solutions of unprecedented scale, power and effectiveness. Our customers are the world's best companies, including more than 550 Fortune 500 and Global 2000 industry leaders who rely on GEP to meet ambitious strategic, financial and operational goals. A leader in multiple Gartner Magic Quadrants, GEP's cloud-native software and digital business platforms consistently win awards and recognition from industry analysts, research firms and media outlets, including Gartner, Forrester, IDC, ISG, and Spend Matters. GEP is also regularly ranked a top procurement and supply chain consulting and strategy firm, and a leading managed services provider by ALM, Everest Group, NelsonHall, IDC, ISG and HFS, among others. Headquartered in
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