A measure of excess supplier capacity within North America rose in September by its smallest margin since April, signaling increased odds of a “soft landing” for the U.S. economy, according to supply chain solution provider GEP.
Although demand remains under pressure, the decline is slowing, and some companies are reporting price increases from their vendors, New Jersey-based GEP said in its monthly “Global Supply Chain Volatility Index.” The report showed that the downturn in global demand for commodities and raw materials is stabilizing, but we're yet to see any signs of actual improvement.
In stark contrast, Europe is by far the globe's biggest weak spot, as plummeting demand in major economies such as Germany and France raises recession risks, GEP said. Notably, Europe was the principal driver of September's sharper rise in idle vendor capacity, with suppliers to the continent registering one of the highest levels of spare capacity since the global financial crisis between 2008 and 2009 amid considerable weakness in demand.
"We're now into our sixth consecutive month of notable excess supplier capacity globally, but the good news is it's not getting substantially worse, except in Europe, where recession seems likely,” Jagadish Turimella, chief operating officer and co-founder, GEP, said in a release. “By contrast, we expect U.S. suppliers and businesses to be steady for the rest of the year, unless the labor disputes in health care and the auto sector spread, or there is a price spike in oil, its derivates or agricultural commodities."