GEP’s Global Supply Chain Volatility Index for October 2024 reveals one of the highest levels of spare capacity at global suppliers in over a year, indicating a contraction in Western manufacturing and a shift in the global supply chain landscape.
US and European Manufacturing Face Downturn
The GEP Index for October 2024 shows a significant contraction in manufacturing activity in the US and Europe. US manufacturers made their strongest cutbacks to buying volumes in nearly 18 months, preparing for lower production volumes. Meanwhile, key European markets like Germany, France, and Austria continue to face industrial challenges, indicating a prolonged recession across the continent.
Asia Shows Resilience Amid Global Supply Chain Shifts
In contrast to the Western markets, Asian suppliers reported lesser spare capacity, thanks to the sustained expansion of certain manufacturing industries, such as India’s. China’s factory production growth rebounded in October, indicating a revival in manufacturing activity after three months of decline. However, Japanese and South Korean producers made fewer purchases, signaling potential manufacturing slowdowns in these economies.
The GEP Global Supply Chain Volatility Index, a leading indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs, posted -0.39 in October, marking little change from the -0.43 seen in September. This indicates one of the highest levels of spare capacity at global suppliers for more than a year, with no sight of an imminent turnaround in Western manufacturing.
The index also reveals that October marked the 14th consecutive month where the ‘items in short supply indicator’ has been negative, showing an excess supply of commodities and intermediate goods relative to current manufacturing demand globally.
The global supply chain landscape is undergoing significant shifts, with Western manufacturing facing a downturn and Asian markets showing resilience. As we move into 2025, these trends could have profound implications for supply chain strategies and operations worldwide. Will Western manufacturers be able to rebound, or will Asia continue to lead in manufacturing growth? Only time will tell.
