Manufacturing Slump to Continue in 2024

The GEP Global Supply Chain Volatility Index was once again in negative territory at -0.34 in November, compared to -0.41 in October, indicating an eighth successive month of spare capacity across global supply chains, according to GEP.

Nvb Stocker Adobe Stock 387392744
NVB Stocker AdobeStock_387392744

The GEP Global Supply Chain Volatility Index was once again in negative territory at -0.34 in November, compared to -0.41 in October, indicating an eighth successive month of spare capacity across global supply chains, according to GEP.

“This persistent, month-after-month, excess vendor capacity means that the end to the global manufacturing recession is still some way off,” says Todd Bremer, vice president, consulting, GEP. “North America continues to buck the global economic headwinds. Continuing excess supplier capacity in Asia gives manufacturers greater leverage to drive down prices in 2024.”

Key takeaways:

  • Weakness in demand for raw materials, components and commodities continued in November, although the global slump in purchasing activity did ease, primarily because of North America, which seems to be well past the peak of its manufacturing industry downturn. In fact, output and new orders at intermediate goods makers in the United States, which includes chemicals, metals, electronic components and electrical equipment manufacturers, improved in November.
  • On the other hand, Europe’s slump in demand remained severe, reflecting recessionary conditions. Capacity at Asia’s suppliers went underutilized to one of the greatest degrees in the post-pandemic era, boding ill for the near-term outlook of global manufacturing.
  • Slight improvements in global item supply, easing transport cost pressures and destocking, as seen in GEP’s November data, provide additional evidence of continuing weakness across the global economy.
  • Reports of backlogs accumulated because of labor unavailability remain historically subdued, showing that production capacities are not constrained by staff supply.
  •  Global transportation costs have stabilized and held close to the long-term average in November.
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