Safety Stockpiling Surges to Three-Year High as Supply Chain Pressures Mount
Event summary
- Safety stockpiling reached its highest level since January 2023 as businesses front-loaded purchases to guard against inflation and shortages.
- Global demand for inputs hit its strongest level since March 2022, driven by aggressive purchasing in North America and Asia.
- Shortages worsened to their highest level in three-and-a-half years, exacerbating supply chain pressures.
- Transportation cost pressures eased slightly but remained elevated, ranking as the second-strongest since March 2022.
The big picture
The data signals a rare pattern of elevated stockpiling, shortages, and transportation costs, reminiscent of the 2021-23 supply chain crisis. This surge in purchasing is likely temporary, with companies expected to pull back once inventory levels are sufficient. The broader economic outlook suggests potential weakening in the second half of 2026 as businesses adjust their procurement strategies.
What we're watching
- Inventory Correction
- Whether the surge in purchasing will lead to a sharp fall in the index as supply chains self-correct through weaker input demand or deteriorating economic conditions.
- Economic Weakness
- The pace at which economic conditions weaken in the second half of 2026 as companies pull back on input purchasing to draw down inventories.
- Geopolitical Impact
- How the effective closure of the Strait of Hormuz will continue to influence supply chain volatility and inflation.
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