The GEP Global Supply Chain Volatility Index dropped from -0.18 in August to -0.35 in September.
The index is based on a monthly survey of 27,000 businesses and tracks demand conditions, shortages, transportation costs, inventories and backlogs.
“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, GEP co-founder and CEO, said. “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.”
In North America, the index rose to -0.30, from -0.55, its highest since April. This indicates a soft landing for the U.S. economy.
In Europe, the index fell from -0.50 to -1.01. Suppliers had one of the highest levels of spare capacity since the 2008-2009 global financial crisis. Demand was weak signaling elevated recession risks. U.K. suppliers saw a rise in spare capacity.
In Asia, the index fell from 0.06 to -0.20. Suppliers reported greater spare capacity for the first time since July, suggesting manufacturers are preparing for lower production schedules.