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Insights from the GEP Global Supply Chain Volatility Index

In the latest report from GEP, the Global Supply Chain Volatility Index indicates a significant shift in global manufacturing dynamics for February 2026. The data highlights a sharp growth in manufacturing activity across Asia, contrasting starkly with a reduction in North American manufacturing inputs. This analysis is derived from a robust survey encompassing around 27,000 businesses worldwide, tracking demand conditions, transportation costs, inventories, and more.

Overview of Global Manufacturing Trends

The data presented by the GEP index shows that Asian supply chains have been busier than they have been since October 2022. Countries like China, Japan, India, South Korea, and Taiwan have reported a remarkable surge in purchasing activity. This uptick suggests a cyclical recovery in manufacturing, driven predominantly by the region's robust economic activities.

In contrast, the North American manufacturing sector displayed signs of weakness. A notable drop in purchasing activity was registered, reflecting a cooling in the U.S. manufacturing growth, with signs indicating that previously observed momentum has tapered off. Interestingly, Canadian producers took a different path, showing an increase in raw material and intermediate product purchases for the first time in over a year, suggesting regional variations in economic resilience even within North America.

Meanwhile, Europe showed positive signs of industrial recovery, especially in Germany, where manufacturing activities gained traction. However, this recovery has not been without its challenges, as supply bottlenecks have begun to emerge, hinting at a stretch in supply capacity amid rising demand.

Key Findings from the Current GEP Index

1. Asian Markets Drive Growth: The index for Asia surged to 0.40 from 0.12, marking it the busiest period for supply chains in three and a half years. This rise can largely be attributed to advanced manufacturing growth in key economies in the region.

2. North America's Decline: The North American index slipped from 0.06 to -0.26, signifying an underutilization of supplier capacity as purchasing activity diminished consequently.

3. European Progress: Europe’s index rose from -0.27 to 0.05, showcasing gradual recovery in industrial activities, although concerns regarding supply bottlenecks have arisen.

4. Consumer and Capital Procurements: The robust demand for commodities and raw materials has escalated globally, particularly in Asia, emphasizing a broad recovery trend across both capital-intensive and consumer-facing industries.

5. Labor Market Stability: Reports on labor shortages have stabilized, suggesting that workforce constraints are not overly restrictive in the context of global production.

6. Transportation Costs: Transportation costs remained consistent with historical averages, reflecting stable logistics conditions despite the variances in manufacturing outputs.

7. Material Shortages Report: Instances of material shortages were more prevalent in February, indicating a complex landscape where supply issues persist, though aligned with long-term averages.

Implications for Global Supply Chains

The insights derived from the GEP Global Supply Chain Volatility Index highlight that businesses must remain vigilant in assessing their exposure to fluctuations in manufacturing capabilities. John Piatek, vice president of consulting at GEP, noted the impending disruptions due to escalating tensions in the Middle East, particularly emphasizing how the war with Iran could result in significant disruptions to oil supplies and, consequently, supply chains.

To navigate these challenges, companies will need to engage in proactive measures. This includes securing price reductions from suppliers following recent tariff rulings by the Supreme Court, particularly in the U.S. market. Firms are encouraged to evaluate their strategic positions in energy, shipping costs, and labor procurement as they pivot towards recovery.

Conclusion

As global supply chains face the twin pressures of increasing demand and supply limitations, the contrasting trends observed in Asian and North American manufacturing provide valuable insights. Organizations need to adapt swiftly to these changes, ensuring they remain agile and resilient in today’s volatile economic landscape. The upcoming release of the GEP Global Supply Chain Volatility Index on April 10, 2026, is anticipated to further illuminate these trends and assist businesses in navigating future challenges.