FACTORY DEMAND WEAKENS ACROSS MAJOR ECONOMIES IN OCTOBER: GEP GLOBAL SUPPLY CHAIN VOLATILITY INDEX

Core Insights - U.S. factories are significantly reducing purchases, indicating potential manufacturing weakness that may impact the broader economy in 2025 [1][3] - In contrast, Chinese factories are experiencing growth after three months of declining input purchasing [1][4] - Europe's industrial recession continues, particularly affecting Germany, France, and Austria [1][5] Demand Conditions - The GEP Global Supply Chain Volatility Index recorded -0.39 in October, indicating high levels of spare capacity among global suppliers [1] - Procurement activity remains weak globally, with North America showing the weakest purchasing activity in October [8] - Demand for commodities, components, and raw materials is contracting at one of the steepest rates seen in 2024 [8] Inventory Management - Inventory drawdowns have intensified across factories worldwide, with companies aiming to manage stocks tightly in response to weak order situations [8] - Reports of safety stockpiling are low by historical standards, reflecting a cautious approach to cash flow management [8] Labor and Transportation - Labor shortages are causing backlogs to rise, although factory employment levels have decreased recently [9] - Global transportation costs remained consistent with long-run averages during October [9] Regional Analysis - North America: Index at -0.72, indicating substantial spare capacity among suppliers [10] - Europe: Index at -0.52, showing a continuation of the industrial recession [10] - Asia: Index at -0.20, with India showing strong positive influence despite overall spare capacity [10]