• Global producer capacity goes underutilized for an eighth successive month in November; supplier order books remain unfilled
• Inactivity across Asia's supply chains bodes ill for near-term global manufacturing improvement
• Demand stays subdued, especially in Europe, where manufacturing is in a recession
• In contrast, North America is displaying greater resistance to global economic drags as supplier spare capacity becomes less prevalent 

CLARK, N.J., Dec. 14, 2023 -- The GEP Global Supply Chain Volatility Index — a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses — was once again in negative territory at -0.34 in November, compared to -0.41 in October, indicating an eighth successive month of spare capacity across global supply chains.

"This persistent, month-after-month, excess vendor capacity means that the end to the global manufacturing recession is still some way off," explained Todd Bremer, vice president, consulting, GEP. "North America continues to buck the global economic headwinds. Continuing excess supplier capacity in Asia gives manufacturers greater leverage to drive down prices in 2024."

Weakness in demand for raw materials, components and commodities continued in November, although the global slump in purchasing activity did ease, primarily because of North America, which seems to be well past the peak of its manufacturing industry downturn. In fact, output and new orders at intermediate goods makers in the U.S. — which includes chemicals, metals, electronic components and electrical equipment manufacturers — improved in November. 

On the other hand, Europe's slump in demand remained severe, reflecting recessionary conditions. Capacity at Asia's suppliers went underutilized to one of the greatest degrees in the post-pandemic era, boding ill for the near-term outlook of global manufacturing.

Slight improvements in global item supply, easing transport cost pressures and destocking, as seen in GEP's November data, provide additional evidence of continuing weakness across the global economy.

NOVEMBER 2023 KEY FINDINGS

• DEMAND: Weakness in demand for raw materials, components and commodities persisted in November, although, encouragingly, the downturn was its softest since April. Regional data revealed less aggressive cuts to purchasing by North American and Asian companies, but the decline in input demand remained considerable in Europe.
• INVENTORIES: Global businesses continue to demonstrate little appetite for building up their stocks, with inventory managers unwilling to hold surplus stock in warehouses.
• MATERIAL SHORTAGES: Reports of item shortages fell again in November and remained at their lowest since January 2020.
• LABOR SHORTAGES: Reports of backlogs accumulated because of labor unavailability remain historically subdued, showing that production capacities are not constrained by staff supply.
• TRANSPORTATION: Global transportation costs have stabilized and held close to the long-term average in November.

REGIONAL SUPPLY CHAIN VOLATILITY

• NORTH AMERICA:  The index rose to -0.21, from -0.34, its highest level since April, and is now well below its low point of -0.85 in June, suggesting the manufacturing downturn has passed its peak in the U.S.
• EUROPE: The index rose to -0.85, from -0.90, but remains at a level consistent with significant economic weakness as recession looms for the continent.
• U.K.: A big increase in the index from -0.93 to -0.58 tentatively suggests the U.K.'s economy may fare better than some of its European peers, but the U.K.'s suppliers are still experiencing considerable spare capacity.
• ASIA: The index rose to -0.24, from -0.38. Nonetheless, this still highlighted one of the greatest degrees of vendor spare capacity in the post-pandemic era.

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, January 12, 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 Europe, Asia, North America and the U.K. For more information about the methodology, click here.

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 Clark, New Jersey, GEP has offices and operations centers across Europe, Asia, Africa and the Americas. To learn more, visit www.gep.com.

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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.

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