Global purchases of raw materials and components grew in February at the fastest rate in nearly four years, fueled by a manufacturing surge across Asia while North American factory demand contracted, according to the GEP Global Supply Chain Volatility Index.
Why it matters: The data points to a diverging global economic landscape, with Asia's rebound signaling a potential cyclical upswing. However, weakening momentum in the U.S. and new geopolitical events could disrupt this recovery.
The big picture: The index, based on a monthly survey of 27,000 businesses, showed a broad-based upturn across both capital-intensive and consumer-facing industries prior to the recent outbreak of war in the Middle East.
Zoom in:
- Asia was the primary engine of growth, with China, Japan, India, South Korea, and Taiwan reporting strong purchasing activity. This resulted in the region's busiest month for supply networks in three-and-a-half years.
- North America saw a weaker trend, reflecting a loss of momentum in the U.S. manufacturing sector. In contrast, Canadian producers increased their purchases of materials for the first time in over a year.
- Europe's industrial recovery continued, led by Germany. The increased procurement activity has started to stretch supply capacity, creating some bottlenecks in the region and in the U.K.
- "The war with Iran is already creating an oil supply shock that will disrupt global supply chains," said John Piatek, vice president of consulting at GEP.
- Piatek advised companies to assess their exposure to rising energy, petrochemical, and shipping costs, while also urging U.S. manufacturers to "proactively secure price reductions from suppliers following the Supreme Court's tariff ruling."
View the GEP Global Supply Chain Volatility Index here.
SOURCE: GEP Global Supply Chain Volatility Index
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