- Asian supply chains at full capacity as export growth in
China, Taiwan and India drives factory activity
- European factories cut inventories as industrial slowdown
continues, but tentative signs of recovery emerge
CLARK,
N.J., March 12, 2025 /PRNewswire/ -- 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 — fell to -0.45 in February, from -0.21 in January, its
lowest level since July 2023. While
the index shows that overall supply chain capacity became more
underutilized globally, regional data reveals significant
geographical differences.
In the U.S., manufacturers' demand for raw materials and
components saw a notable uptick in February, reflecting a mix of
preparations for orders and efforts to avoid higher costs from
additional tariffs. U.S. factories also reported accelerating sales
growth as their customers acted to front-run price and supply
challenges arising from tariffs, driving up procurement. Efforts to
mitigate tariffs also propelled stockpiling by U.S. manufacturers
in February.
In stark contrast, Mexican and Canadian
manufacturers harshly reduced their purchases in response to a
rapid reduction in exports as U.S. companies refrained from placing
orders due to the threat of tariffs and trade policy
uncertainty.
In Europe, manufacturers are
making inventories cutbacks. The continent's supply chains continue
to be underutilized as the industrial sector remains sluggish. That
said, there does appear to be some early indication of recovery as
the downturn in factory demand for inputs cooled to its weakest in
two-and-a-half years.
Asia supply chains continue to
be at full capacity in February, as was the case at the start of
the year, making them the most active globally. Factories in parts
of the region such as China,
Taiwan and India reported strong export growth.
"With tariffs driving uncertainty, U.S. manufacturers are racing
to secure materials, while Canadian and Mexican suppliers are
feeling the squeeze from weaker export demand. In contrast,
Asia's supply chains are operating
at full capacity, fueled by strong export growth," said Krish
Vengat N., GEP's vice president of consulting. "Companies must
remain agile—diversifying supply sources and optimizing inventory
strategies to navigate this ongoing volatility."
Interpreting the data:
Index > 50 means growth.
The further above 50, the faster the growth
Index < 50
means decreasing. The further below 50, the larger the
contraction.
Interpreting 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.
FEBRUARY 2025 KEY
FINDINGS
- DEMAND: Globally, demand for raw materials, components
and commodities is trending broadly level with its long-term
average, following over two-and-a-half years of subdued purchasing
by factory procurement managers. Buying activity is the strongest
in Asia, although a pick-up in the
U.S. was recorded in February as manufacturers restocked and
ordered ahead of higher tariffs.
- INVENTORIES: Global stockpiling activity decreased in
February, suggesting that global manufacturers' appetite to hold
excess stock in their warehouses remains low. Although demand is
trending upwards, our data suggests that procurement managers are
still carefully managing cashflow in an environment of rising
production costs. The data also implies a "wait-and-see" mentality
to increased global trade policy uncertainty.
- MATERIAL SHORTAGES: Our global item shortages indicator,
which tracks the availability of critical commodities, common
inputs and components, remains below its long-term average,
signaling robust global material supply levels. This metric implies
that vendors have stock to meet orders from their customers.
- LABOR SHORTAGES: In February, we received fewer reports
from global manufacturers of backlogs rising due to inadequate
staff capacity.
- TRANSPORTATION: Global transportation costs were
unchanged from January, when they hit the highest in six months.
Still, they remain close to levels which can be considered normal,
by historical standards.
REGIONAL SUPPLY CHAIN VOLATILITY
- NORTH AMERICA: Index
rises to -0.18, from -0.22, a seven-month high and signalling that
North American supply chains are their busiest since July 2024. This was exclusively a reflection of
conditions in the U.S., however, as Mexican and Canadian
manufacturing industries slowed in February.
- EUROPE: Index falls
to -0.72, from -0.61, signalling slightly greater slack in
Europe's supply chains compared
with the beginning of the year.
- U.K.: Index down to -0.85, from -0.63, its lowest
level since December 2023, a signal
that the U.K. economy is slowing in the first quarter.
- ASIA: Index at 0.00,
versus 0.03 in January. Overall, the data shows that Asian supply
chains are at full capacity. Asian factories are benefitting from
stronger export growth, underlying data revealed.
For more information, visit www.gep.com/volatility.
Note: Full historical data dating back to January 2005 is available for subscription.
Please contact economics@spglobal.com.
The next release of the GEP Global Supply Chain Volatility
Index will be 8 a.m. ET, Apr. 10, 2025.
About the GEP Global Supply Chain Volatility Index
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 1,000 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.
About S&P Global
S&P Global (NYSE: SPGI) S&P Global provides essential
intelligence. We enable governments, businesses and individuals
with the right data, expertise and connected technology so that
they can make decisions with conviction. From helping our customers
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