Global manufacturing activity jumped in May, breaking into positive territory for the first time in 14 months and indicating a “robust outlook” for the second half of 2024, a GEP report says.
That report comes from the New Jersey-based software vendor’s “GEP Global Supply Chain Volatility Index,” which tracks demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses.
Combined into a single index number, the result increased notably in May to 0.21, from -0.18 in April. This marks the first time since March 2023 that the index has been in positive territory, signaling that global vendors are working at capacity and that supply chains are at their busiest for more than a year.
According to GEP, a key factor behind the index's increase in May was a further improvement in global manufacturing demand, leading factories to ramp up their purchases of raw materials, commodities and components. Purchasing growth was especially strong in Asia, particularly in key exporting countries such as China, India, and South Korea.
Suppliers to North America also got busier during May, with their capacity slightly stretched as a result. This partly reflected more supportive demand conditions for businesses in the U.S. and Mexico. The European market, which has been a laggard since mid-2022, improved notably although it remains in negative territory.
"The broad-based nature of the breakout we're seeing in May is a hugely encouraging sign for the global economy going into the second half of 2024," Mudit Kumar, vice president, GEP Consulting, said in a release. "If this trend continues, businesses can expect renewed efforts by vendors to raise prices, especially given the recent surge in the cost of many commodities."
