Demand for Commodities Hits its Softest Point in Nearly a Year

The GEP Global Supply Chain Volatility Index shows global supply chain capacity going underutilized to the greatest extent since July at the end of 2023, with the index falling to -0.44 in December.

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The GEP Global Supply Chain Volatility Index shows global supply chain capacity going underutilized to the greatest extent since July at the end of 2023, with the index falling to -0.44 in December, from -0.34 in November. This marked the ninth successive month of spare capacity across global supply chains, with slack at producers at one of the highest levels since COVID-19 shutdowns in early 2020.         

Overall, demand for raw materials, commodities and components was at its most subdued since the start of 2023, boding ill for near-term global production levels. Our data revealed a persistence of recessionary conditions in Europe, with purchasing at the region's manufacturers falling at a pace rarely surpassed in two decades of data.

"Rising spare capacity at suppliers worldwide means that the end to the global manufacturing recession is still some way off," explains David Doran, vice president, consulting, at 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."

Key Takeaways:

  • Order books for suppliers to North America and Asia, two parts of the globe that fared much more robustly than elsewhere last year, also deteriorated in December, showing fresh signs of weakness in major economies. Notably, Asian supply chains were the most underutilized in three-and-a-half years, with manufacturing industries in the region's major economies such as Japan, South Korea and Malaysia seeing a worsening. However, slack in North America's supply chains remained far less widespread than mid-2023's zenith.
  • In addition to soft supplier order books, the subdued current state of the global manufacturing industry was also highlighted by historically low reports of item shortages and backlogs, suggesting excess global supply levels, which will put further downward pressure on the prices of goods.


  • The downturn in demand for raw materials, components and commodities worsened in December. Purchasing cutbacks were at the strongest seen since the beginning of 2023 as orders from clients in North America and Asia slumped. Demand weakness remained its most apparent in Europe, however.
  • Reports of safety stockpiling due to price or supply concerns held steady at its long-term average, showing little appetite among businesses to hold excess in their inventories.
  • Reports of item shortages are at their lowest level since January 2020.
  • The number of companies experiencing backlog accumulation due to a lack of staff fell further in December, indicating that workforce capacity is not restricting suppliers.
  • Global transportation costs are running below their long-term average and dipped to a five-month low in December.


  • The index fell to -0.39, from -0.21, its lowest level since August, but still well below its recent bottom of -0.85 in June.
  • The index fell to -0.92, from -0.85, its lowest in three months and consistent with severe fragility within the region's manufacturing sector.
  • After rising to -0.58 in November, its highest since April, the index dropped to -1.05 in December, its lowest since April 2020, thereby highlighting considerable weakness across U.K. manufacturing.
  • The index fell to -0.42, from -0.24, its lowest level in the post-pandemic era and pointing to growing signs of weakness within the globe's key hub for goods production.