Clark, N.J., Sept. 13, 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 — recorded -0.18 in August (vs. -0.50 in July), showing sustained idle capacity at global suppliers as demand conditions remained subdued and procurement managers stayed cautious.
August is the 14th successive month in which global demand displayed weakness, reflecting the brittle global economic environment. Conditions are their most fragile in Europe, where demand continues to fall drastically, and recession risks appear their most prominent. Demand also fell considerably across North America in August, indicating a slowing economy. In contrast, demand conditions are more stable in Asia, despite the slow Chinese economy, with purchasing rising strongly in India, Indonesia and Vietnam.
Notably, global transportation costs rose to their highest level since February amid renewed pressures on fuel prices as oil producers announced cuts to supply. U.S. and European manufacturers are also experiencing some renewed pressures arising from staff shortages due to tight labor markets and wage pressures.
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.”
Interpretating the data:
August 2023 Key Findings:
REGIONAL SUPPLY CHAIN VOLATILITY
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The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, October 13, 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 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.
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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