No End to Global Manufacturing Recession in Sight As Supply Chains Worldwide Remain Significantly Underutilized: GEP Global Supply Chain Volatility Index

  • Asia’s suppliers see largest rise in idle capacity since June 2020 as the region’s economic resilience fades
  • Europe reported a 7th successive month of substantial excess vendor capacity, and 17th successive month of subdued demand, reflecting recessionary conditions
  • In contrast, supplier spare capacity across North America is rising, albeit modestly, highlighting greater economic resilience in the U.S. economy and its divergence from Europe

Clark, N.J., Nov. 15, 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 — decreased again in October to -0.41, from -0.35 in September, indicating a 7th successive month of rising spare capacity across the world’s supply chains. Additionally, the extent to which supplier capacity went underutilized was even greater than in September and August. Coupled with October’s downturn in demand for raw materials, components and commodities, this shows rising slack in global supply chains.

“While the shrinking of global suppliers’ order books is not worsening, there are no signs of improvement,” explained Jamie Ogilvie-Smals, vice president, consulting, GEP. “The notable increase in supplier capacity in Asia, which was driven by China, provides global manufacturers with greater leverage to drive down prices and inventories in 2024.”

A key finding from October’s report was the strongest rise in excess capacity across Asian supply chains since June 2020. Sustained weakness in demand, coupled with falling pressures on factories in Asia, indicates that the global manufacturing recession has further to run. With the exception of India, which continues to perform strongly, large economies in the region, such as Japan and China, are losing momentum.

Suppliers in Europe continue to report the largest level of spare capacity. In fact, the lower levels in GEP’s supply chain index for the continent have only been seen during the global financial crisis between 2008 and 2009. They highlight sustained weakness in economic conditions across the continent. Western Europe, particularly Germany’s manufacturing industry, is a key driver behind the region’s deterioration.

A relatively bright spot is North America, where supply chains have excess capacity, but to a much lesser extent than elsewhere as the U.S. economy continues to display its resilience, in stark contrast to Europe.


Interpretating 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.


  • DEMAND: Demand for raw materials, components and commodities remains depressed, although the downturn seems to have stabilized. There are still no signs of conditions improving, however, as global purchasing activity fell again in October at a pace similar to what we’ve seen since around mid-year.
  • INVENTORIES: With demand falling, our data shows another month of destocking by global businesses, signalling cashflow preservation efforts.
  • MATERIAL SHORTAGES: Reports of item shortages remain at their lowest since January 2020.
  • LABOR SHORTAGES: Shortages of workers are not impacting global manufacturers’ capacity to produce, with reports of backlogs due to inadequate labor supply running at historically typical levels.
  • TRANSPORTATION: Global transportation costs held steady with September’s level, although oil prices have declined in recent weeks.



  • NORTH AMERICA: The index fell to -0.34, from -0.30. This remains much softer than the global average and continues to suggest the U.S. economy is poised for a soft landing.
  • EUROPE: The index rose to -0.90, from -1.01, but still remains at a level that is indicative of considerable economic fragility.
  • U.K.: The index edged slightly higher to -0.93, from -0.98. Still, the data point to a substantial rise in excess capacity at suppliers to U.K. markets.
  • ASIA: Notably, the index dropped to -0.38, from -0.20, highlighting the biggest rise in spare supplier capacity in Asia since June 2020 as the region’s resilience fades.

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The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, December 14, 2023.


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

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