- Global supply chains are operating near maximum capacity,
signaling steady outlook for the manufacturing sector
- Asian factories purchase more inputs to meet growing orders,
increasing pressure on the region's suppliers
- North American manufacturers report some difficulties
meeting orders due to shortages of staff and critical
materials
- Global transportation costs rise slightly, following a
recent increase in oil prices
CLARK,
N.J., May 13, 2024 /PRNewswire/ -- 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 — rose in April to -0.18, from -0.32 in March, which
signals that global supply chains are operating at close to full
capacity.
Improving activity across global supply chains are a direct
result of healthier demand, which has picked up consistently in the
year-to-date after considerable weakness in 2023. The Asian market
is at the forefront of this trend, with input demand at the
region's factories remaining strong. Procurement managers in
South Korea, Vietnam, India and China reported greater purchasing activity
during April.
The North American market is showing more evidence of tightening
capacity, with backlogged work reported by manufacturers,
particularly in Mexico. Demand for
raw materials, commodities and components, while still subdued,
also improved slightly.
Demand conditions were less robust in Europe, with the region's manufacturing sector
continuing to underperform and lag other parts of the globe.
Positively, however, the industrial recession across the continent
has eased considerably since late last year.
"After four years of supply shocks, inflation, stockpiling, and
uncertainty, global supply chains are now operating in a Goldilocks
zone, a steady state of full capacity, not expanding or contracting
too quickly, which is excellent news for global suppliers and
business," explained Mike Seitz,
vice president, GEP Consulting. "In China, we're seeing a steady
pick-up in manufacturing activity, which will encourage Chinese
Premier Li Qiang to accelerate
efforts to remove barriers imposed by European markets and foster
more FDI, especially as the potential for tougher U.S. tariffs and
trade policies loom."
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.
APRIL 2024 KEY FINDINGS
- DEMAND: Global demand for raw materials, commodities and
components remained close to its long-term average in April,
highlighting vastly improved conditions in the worldwide
manufacturing sector compared with late last year. As was also the
case in March, Asia was the main
positive force, with major goods-producing nations such as
China, India and South
Korea recording growth.
- INVENTORIES: Inventory drawdowns persisted into April,
albeit cooling in strength compared to March. Reports from global
businesses of stockpiles rising because of price or supply concerns
were among the lowest seen in over four years.
- MATERIAL SHORTAGES: Reports of short supply for items,
including semiconductors, foodstuff, chemicals, and metals, remain
historically low.
- LABOR SHORTAGES: After rising for the past three months,
global reports of backlogged orders rising because of staff
shortages fell in April and were broadly aligned with historically
typical levels. Regional differences persisted, however, with
North America seeing greater labor
shortages than elsewhere.
- TRANSPORTATION: Following recent increases in oil
prices, global transportation costs rose for the first time this
year in April.
REGIONAL SUPPLY CHAIN VOLATILITY
- NORTH AMERICA: Index
broadly unchanged at -0.30, versus -0.31 previously. Although
indicative of spare capacity, the input demand trend ticked higher
in April, while increased backlogs of work were also
reported.
- EUROPE: Index fell
to -0.55, from -0.62. April's increase suggests the continent's
industrial downturn continued to ease.
- U.K.: Index decreased to -0.47, from -0.17 as U.K.
manufacturers destock sharply instead of ordering from
suppliers.
- ASIA: Index rose to
0.07, from -0.07, signaling the first month of stretched supplier
capacity since January.
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, June 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 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)
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Media
Contacts
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Derek
Creevey
|
Joe Hayes
|
Director, Public
Relations
|
Principal
Economist
|
GEP
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S&P Global Market
Intelligence
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Phone: +1 732-382-6565
|
Phone:
+44-1344-328-099
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Email:
derek.creevey@gep.com
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Email:
joe.hayes@spglobal.com
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