WEAK GLOBAL DEMAND AND SPARE CAPACITY AT GLOBAL SUPPLIERS PERSIST IN AUGUST AS GLOBAL ECONOMY FLIRTS WITH RECESSION: GEP GLOBAL SUPPLY CHAIN VOLATILITY INDEX
- Transportation costs reach highest level since February due to increasing oil prices. Demand conditions are stable in Asia, with strong purchasing in India, Indonesia, and Vietnam.
- Excess supplier capacity indicates a subdued economic environment, particularly in Europe. Recession risks prominent in Europe. Demand fell considerably in North America in August.
- Increasing oil prices push up transportation costs to their highest since February
- Excess supplier capacity reflects a persistent subdued economic environment, with
Europe at the epicenter of the downturn - In contrast, resilience seen in
Asia , driven by demand rising strongly inIndia ,Indonesia andVietnam - More European and North American manufacturers are reporting a rise in backlogs due to staff shortages
August is the 14th successive month in which global demand displayed weakness, reflecting the brittle global economic environment. Conditions are their most fragile in
Notably, global transportation costs rose to their highest level since February amid renewed pressures on fuel prices as oil producers announced cuts to supply.
Commenting on the August data, Neha Shah, president, GEP, said: "Our data shows that we're currently on a fine line hovering between recession and stagnation. Despite many months of excess global supply and subdued demand, companies can expect rising costs from petrochemicals industries, shortages of certain commodities, including sugar, rice, and wheat, and also wage pressures in some sectors because of the effective collective bargaining by employees."
August 2023 Key Findings:
- DEMAND: Demand for raw materials, commodities and components continues to deteriorate at a similar pace to that seen in the other summer months, with little improvement seen at all in 2023.
Europe led the downturn in purchasing, followed byNorth America . - INVENTORIES: Global businesses continue to demonstrate little appetite for building up their stocks, with inventory managers unwilling to hold surplus stock.
- MATERIALS SHORTAGES: Supply shortages have ended, with reports of item scarcity now in line with historically normal levels.
- LABOR SHORTAGES: Labor shortages are having a limited impact on companies' ability to meet global demand, although manufacturers in
Europe andNorth America have experienced some renewed issues with staff availability. - TRANSPORTATION: Having fallen to their lowest since January 2016 in July, global transportation costs ticked higher in August amid rising pressures on oil prices.
REGIONAL SUPPLY CHAIN VOLATILITY
NORTH AMERICA : Index fell to -0.55 from -0.37 as demand for materials worsened and firms destocked again.EUROPE : Index rose from the global financial crisis low in July of -1.07 to -0.50, but nonetheless indicates a marked rise in supplier spare capacity.U.K. : Index was little changed in August at -0.92, versus -1.01 in July as the struggling European economy hitsU.K. suppliers.ASIA : Index rose to 0.06, from -0.31, signalling a faint uptick in Asian supply chain volatility compared to July.
For more information, visit www.gep.com/volatility
Note: Full historic 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, October 13, 2023.
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 transformative 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 AI-driven GEP SOFTWARE™, GEP STRATEGY™ and GEP MANAGED SERVICES™ together deliver 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 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
About S&P Global
S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world. We are widely sought after by many of the world's leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world's leading organizations plan for tomorrow, today.
Media Contacts
Derek Creevey | Joe Hayes |
View original content to download multimedia:https://www.prnewswire.com/news-releases/weak-global-demand-and-spare-capacity-at-global-suppliers-persist-in-august-as-global-economy-flirts-with-recession-gep-global-supply-chain-volatility-index-301925320.html
SOURCE GEP