Demand for goods, raw materials and components was the most subdued since early 2023, according to the December edition of the GEP Global Supply Chain Volatility Index.
The supply chain consultancy's monthly survey tracks 27,000 businesses around the world, measuring demand conditions, stockouts, transportation costs, inventory and backlogs. An index value greater than 0 indicates that the supply chain is under stress, and a value less than 0 means that the supply chain capacity is underutilized.
The index recorded the 9th consecutive month of spare capacity across global supply chains, at -0.44 in December, down from -0.35 in November.
Demand for commodities, raw materials and parts was weak in all regions. Europe's index score fell from -0.85 to -0.92, its lowest level in three months. According to GEP, purchases by European manufacturers have been declining at a pace that has rarely been exceeded over the past 20 years.
Asia's index fell from -0.24 to -0.42, the lowest level in the region post-pandemic, indicating weakness in the global manufacturing base.
The North American index fell from -0.21 to -0.39, its lowest level since August, but still significantly stronger than June's low of -0.85.
“Increasing supplier capacity around the world means the end of the global manufacturing recession is still far away,” said David Dolan, vice president of consulting at GEP. “Furthermore, orders for intermediate goods and capital goods manufacturers remain slow, indicating stronger headwinds going forward, giving companies significant leverage to drive down prices in 2024.”
Reports of stockpiling remained stable on a long-term average, with companies showing little appetite for holding excess inventory, while reports of shortages were at their lowest level since January 2020.
The number of companies with backlogs accumulating due to staffing shortages fell further in December, indicating that labor capacity is not limiting suppliers.
Transportation costs are below the long-term average, hitting a five-month low in December.
