Global Supply Chain Volatility Index Shows Steep Decline in North American Manufacturing Demand
In its latest assessment, the GEP Global Supply Chain Volatility Index indicates a worrying trend in global supply chains, particularly in North America, which is experiencing a substantial decline in manufacturing demand as we head into 2026. This month's results, which stem from a comprehensive survey involving 27,000 businesses worldwide, show an overall underutilization of supply chain capacity, raising concerns about the economic outlook for the upcoming year.
The index revealed a headline figure of -0.29 in November 2025, indicating a persistent slack in capacity across suppliers globally. Notably, North America registered the most significant downturn, with its regional index dropping to -0.53, marking the highest level of underutilization since March of the same year. This alarming decrease reflects a contraction in input demand as manufacturers began to scale back orders in anticipation of a challenging economic environment. The trend points to a weakening near-term outlook for North American manufacturing, raising red flags for industry stakeholders.
Meanwhile, Europe and the UK also displayed signs of fragility amid a lack of robust manufacturing activity. In Germany and France, factories continued to show reluctance to increase purchasing, opting instead for more aggressive cutbacks. The European index dipped to -0.33 from -0.25, evidencing ongoing vulnerabilities in the industrial sector within the region.
Asia, on the other hand, presents a mixed picture. Although the index rose slightly to -0.16 from -0.30, indicating less spare capacity compared to the previous month, the overall demand remains subdued. Particularly, Chinese manufacturing continues to wane, negatively impacting regional purchasing activities. Nevertheless, some ASEAN countries such as Indonesia and Vietnam are demonstrating resilience, helping to offset losses from larger economies.
John Piatek, Vice President of Consulting at GEP, commented on these developments, predicting that companies will have limited purchasing pressures in the near future. "With supply chains remaining slack, we anticipate a buyers’ market heading into 2026 where companies can leverage their position to negotiate favorable terms," he stated, suggesting that the anticipated pause or rollback of tariffs will further ease costs.
Despite the evident challenges, the global supply chain landscape is showing a lack of serious inflationary pressures regarding purchasing costs. Inventory levels remain low due to manufacturers favoring lean warehouse strategies over stockpiling, which the data suggest is still trending historically low. Notably, there are minimal labor shortages reported, further alleviating potential production constraints.
The GEP Global Supply Chain Volatility Index also highlights key findings for November across various regions. Global factories continued to slow purchases of essential commodities, with a noticeable decline driven by weak demand in major economies. Transportation costs have seen a slight increase but remain in line with historical averages, showcasing continued variability in shipping and logistics.
Looking forward, the next release of the GEP Global Supply Chain Volatility Index is scheduled for January 13, 2026, which will provide further insights into the evolving situation as businesses gear up for the new year. Given the current findings, stakeholders in the manufacturing and supply chain sectors must remain vigilant in monitoring these trends as they navigate the complexities of the coming months.
As companies adapt to this shifting landscape, leveraging innovative strategies and remaining agile may well be the key to maintaining operational efficiency and securing competitive advantages in a challenging economic environment. GEP's commitment to delivering AI-powered solutions continues to support enterprises as they adapt and construct more resilient supply chains, reflecting the need for flexibility in response to the ongoing global economic headwinds.
The index revealed a headline figure of -0.29 in November 2025, indicating a persistent slack in capacity across suppliers globally. Notably, North America registered the most significant downturn, with its regional index dropping to -0.53, marking the highest level of underutilization since March of the same year. This alarming decrease reflects a contraction in input demand as manufacturers began to scale back orders in anticipation of a challenging economic environment. The trend points to a weakening near-term outlook for North American manufacturing, raising red flags for industry stakeholders.
Meanwhile, Europe and the UK also displayed signs of fragility amid a lack of robust manufacturing activity. In Germany and France, factories continued to show reluctance to increase purchasing, opting instead for more aggressive cutbacks. The European index dipped to -0.33 from -0.25, evidencing ongoing vulnerabilities in the industrial sector within the region.
Asia, on the other hand, presents a mixed picture. Although the index rose slightly to -0.16 from -0.30, indicating less spare capacity compared to the previous month, the overall demand remains subdued. Particularly, Chinese manufacturing continues to wane, negatively impacting regional purchasing activities. Nevertheless, some ASEAN countries such as Indonesia and Vietnam are demonstrating resilience, helping to offset losses from larger economies.
John Piatek, Vice President of Consulting at GEP, commented on these developments, predicting that companies will have limited purchasing pressures in the near future. "With supply chains remaining slack, we anticipate a buyers’ market heading into 2026 where companies can leverage their position to negotiate favorable terms," he stated, suggesting that the anticipated pause or rollback of tariffs will further ease costs.
Despite the evident challenges, the global supply chain landscape is showing a lack of serious inflationary pressures regarding purchasing costs. Inventory levels remain low due to manufacturers favoring lean warehouse strategies over stockpiling, which the data suggest is still trending historically low. Notably, there are minimal labor shortages reported, further alleviating potential production constraints.
The GEP Global Supply Chain Volatility Index also highlights key findings for November across various regions. Global factories continued to slow purchases of essential commodities, with a noticeable decline driven by weak demand in major economies. Transportation costs have seen a slight increase but remain in line with historical averages, showcasing continued variability in shipping and logistics.
Looking forward, the next release of the GEP Global Supply Chain Volatility Index is scheduled for January 13, 2026, which will provide further insights into the evolving situation as businesses gear up for the new year. Given the current findings, stakeholders in the manufacturing and supply chain sectors must remain vigilant in monitoring these trends as they navigate the complexities of the coming months.
As companies adapt to this shifting landscape, leveraging innovative strategies and remaining agile may well be the key to maintaining operational efficiency and securing competitive advantages in a challenging economic environment. GEP's commitment to delivering AI-powered solutions continues to support enterprises as they adapt and construct more resilient supply chains, reflecting the need for flexibility in response to the ongoing global economic headwinds.
Topics General Business）
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