Demand for inputs at Asian factories shows strongest growth in 2 years

High purchasing activity in the region signals future growth.

Activity across Asia’s supply chains eased slightly in March with demand for inputs climbing at the fastest clip in over two years, according to an industry tracker by GEP and S&P Global.

The GEP Supply Chain Volatility Index for Asia slipped to -0.07 last month from -0.02 in February, indicating suppliers were operating near their full capacity.

Last month’s activity was buoyed by a spike in demand for raw materials, commodities and components as factories across the region ramped up their purchases of inputs at the highest level since December 2021.

Manufacturing powerhouses China and India led the buying spree according to the report. It added that the region’s strong showing last month could be a sign that the entire global manufacturing industry is on track for growth.

“In March, orders placed with Asia’s suppliers ramped up, which is a strong signal of accelerating growth in manufacturing in the coming months,” said Roopa Makhija, president and co-founder, GEP.

Issued monthly, the volatility index tracks demand conditions, shortages, transportation costs, inventories and backlogs of supply chains across the globe.

A reading above 0 signals higher utilisation and volatility in the supply chains, and a reading below 0 indicates factories are being underutilized, resulting in less volatility in the supply chains.

Worldwide, the global GEP Supply Chain Volatility Index fell to -0.33 in March from the 10-month high of -0.08 in February, signaling higher spare capacity as global manufacturers use up inventory surpluses accumulated in the previous months.