GEP: Demand for raw materials and components at softest in nearly a year

16 January 2024 Consulting.us

Demand for commodities, raw materials, and components was at its most subdued since the start of 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 globally to measure demand conditions, shortages, transportation costs, inventories, and backlogs. An index value above 0 indicates supply chains are being stressed, while a value below 0 means supply chain capacity is being underutilized.

The index registered the ninth consecutive month of spare capacity across the global supply chain, hitting -0.44 in December, down from -0.35 in November.

Demand for commodities, raw materials, and components was weak across all regions. Europe’s index score fell to -0.92 from -0.85, its lowest level in three months. GEP says European manufacturer purchasing has fallen at a pace rarely surpassed in the past two decades.

GEP: Demand for raw materials and components at softest in nearly a year

Asia’s index fell to -0.42 from -0.24, reaching the region’s lowest level in the post-pandemic era, and signaling weakness within the globe’s manufacturing hub.

North America’s index fell to -0.39 from -0.21, its lowest point since August, but still significantly stronger than a nadir of -0.85 in June. 

“Rising spare capacity at suppliers worldwide means that the end to the global manufacturing recession is still some way off,” said David Doran, vice president, consulting, GEP. “Moreover, orders at intermediate and capital goods manufacturers are still slowing, which indicates stronger headwinds ahead, providing companies with greater leverage to drive down prices in 2024.”

Reports of stockpiling held steady at its long-term average, with businesses showing little appetite to hold excess inventory, while reports of item shortages were at their lowest level since January 2020.

The number of companies with a backlog accumulation due to lack of staff fell further in December, indicating workforce capacity is not restricting suppliers.

Transportation costs were below their long-term average and fell to a five-month low in December.

More on: GEP
United States
Company profile
GEP
GEP is a Global partner of Consultancy.org
Partnership information »
Partnership information

Consultancy.org works with three partnership levels: Local, Regional and Global.

GEP is a Global partner of Consultancy.org in Africa, Asia, South Africa, Australia, Europe, India, Latin America, United Kingdom, Canada and United States.

Upgrade or more information? Get in touch with our team for details.