GEP: Global manufacturing levels rose in February, led by Asia

Global manufacturing levels rose broadly in February as procurement activity expanded in both capital-intensive and consumer-facing industries, pointing to a cyclical upswing prior to the war in the Middle East, according to a monthly report from GEP. Broken out by regions, supply chains into Asia showed the busiest levels since October, 2022, due to sharp rises in manufacturing activity in China, Japan, India, South Korea, and Taiwan. However, North American factory input demand softened, reflecting a cooling of U.S. manufacturing growth. "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. "Companies need to assess their exposure to energy, petrochemical and shipping costs now, while U.S. manufacturers should also move quickly to proactively secure price reductions from suppliers following the Supreme Court's tariff ruling." The data came from the New Jersey-based procurement and supply chain solution provider’s “GEP Global Supply Chain Volatility Index,” produced by S&P Global and GEP. It is derived from S&P Global's PMI surveys, sent to companies in over 40 countries, totaling around 27,000 companies. The headline figure is a weighted sum of six sub-indices derived from PMI data, PMI Comments Trackers, and PMI Commodity Price & Supply Indicators compiled by S&P Global. The February index numbers for the world’s four main manufacturing geographies were: - ASIA: Index jumps to 0.40, from 0.12, its highest level since October 2022, signaling that supply chains into Asia were their busiest in nearly three-and-a-half years. - NORTH AMERICA: Index slips from 0.06 to -0.26, signaling underused supplier capacity in North America after a pick-up in January. US factories tapered purchasing activity. - EUROPE: Index rises to 0.05, from -0.27, indicating further progress in Europe's industrial recovery. - U.K.: Index increases to -0.01, from -0.17, suggesting that the U.K.'s supply chains are running at full capacity. To interpret those figures, GEP says that when the index is greater than 0, supply chain capacity is being stretched, and when the index is below 0, supply chain capacity is being underutilized.