- Worldwide supply chain spare capacity rises for the third
successive month, remaining at the highest level since zenith of
the pandemic in May 2020
- Demand in Asia, led by
India, is holding up better than
in Europe and North America, highlighting divergence in
growth between Western and Eastern economies
- Global supply shortages fell to their lowest since
January 2020 and companies operated
with low levels of inventories following months of
stock drawdowns
CLARK, N.J, July 14, 2023 /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 — recorded
-0.26 in June (vs. -0.28 in May), marking a third successive month
of excess global supplier capacity. Today's figure highlights the
complete reversal in global supply chain frictions compared to a
year ago, when GEP's index stood at 3.53.
In June, a key finding was the worsening of global demand for
raw materials, commodities and components, specifically in
Europe and North America, signalling a deteriorated
outlook for manufacturing as borrowing costs rise, with risks of
spillover effects to the wider economy intensifying. This in turn
led excess capacity at suppliers operating in these regions to rise
rapidly and by a larger degree than seen in May.
In contrast, input demand in Asia is showing greater resilience. Purchasing
activity across the region is broadly tracking in line with its
historical average, with pockets of strength in some Eastern
markets led by India, one of the
fastest-growing major economies so far in 2023.
Commenting on the June data, Joel
Johnson, vice president, supply chain consulting, GEP, said:
"Weakening demand for components and raw materials in the Western
economies, low levels of inventory and excess global supplier
capacity suggest that storm clouds are gathering. The softening of
demand in the manufacturing sector in the last few months is a
leading indicator that the broader economy in the Western
hemisphere will slow in the second half of 2023. It's a perfect
time for companies' procurement to re-negotiate terms for 2024 and
2025 with suppliers.
June 2023 Key Findings:
- DEMAND: Global demand for raw materials,
commodities and components weakened to the greatest degree since
January, driven by sharper deteriorations in Europe and North
America.
- INVENTORIES: Reports from businesses of safety
stockpiling were only just above their long-run average in June,
indicating little desire among companies to hold excess
inventory.
- MATERIALS SHORTAGES: Reports of item shortages fell
once again in June and are now at their lowest level since
January 2020.
- LABOR SHORTAGES: Reports of backlogs directly due
to a lack of employees are historically low.
- TRANSPORTATION: Global transportation costs fell
further below their historical average, significantly easing
inflationary pressures on companies.
REGIONAL SUPPLY CHAIN VOLATILITY
Supplier capacity in Asia also
remains underutilized, but to a much lesser extent than in Western
economies.
- NORTH AMERICA: Declined to -0.85 in June from
-0.70 in May as input demand weakened notably.
- EUROPE: Declined to
-0.67 in June from -0.58 in May, as input demand declined in
lockstep with North
America.
- U.K.: Remained subdued at -0.60 in June but
relatively unchanged from -0.66 in May.
- ASIA: Bucked
the global downward trend at -0.17 in June versus -0.18 in May as
region shows more resilience.
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, August 14, 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.
For more information, click here.
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 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. To learn
more, visit www.gep.com.
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.
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Contacts
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Joe Hayes
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Director, Public
Relations
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Principal
Economist
|
GEP
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S&P Global Market
Intelligence
|
T
646.276.4579
|
T:
+44-1344-328-099
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Email: derek.creevey@gep.com
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