#USA #Clark #GEP Global Supply #Supply Chain Index #Manufacturing Purchasing

Declining Manufacturing Purchases in North America and Europe

As we close out the year 2025, the GEP Global Supply Chain Volatility Index has painted a concerning picture for manufacturers in North America and Europe. With purchasing activities declining significantly in December, the outlook for these regions as we head into 2026 appears grim. This downturn highlights the broader economic challenges facing global supply chains today.

The GEP Global Supply Chain Volatility Index serves as a key indicator tracking various aspects such as demand conditions, shortages, transportation costs, and inventory levels through a comprehensive monthly survey that encompasses approximately 27,000 businesses. The index is critical for understanding capacity utilization across global markets, and December has shown continued strains, particularly in Western nations.

Trends in Purchasing Activity

In December, North America experienced its fastest rate of purchasing decline since May 2025, marking the sixth consecutive month of reduced demand for inputs. The manufacturing environment in North America was largely characterized by a significant pullback in purchasing activities, especially in Mexico, where reductions were most profound.

Conversely, while North American manufacturers grapple with these declines, Asian markets displayed a more resilient purchasing behavior. Notably, South Korea and Vietnam saw enhancements in buying activity, with Chinese manufacturers stabilizing their procurement, thereby supporting overall regional demand.

A Closer Look at European Declines

The situation is similarly troubling in Europe. The region recorded its most significant decrease in factory purchasing in the past nine months, largely attributed to cuts in Germany, where businesses continued to scale back orders amidst muted demand. Despite this, the European index edged up to -0.17 in December—its highest level since June 2025—indicating potential fluctuations in labor constraints that affected order fulfillment.

In stark contrast, the U.K. had a modest uptick in its index to 0.12, signaling an unusual stretch in supplier capacity, suggesting localized growth amidst broader declines.

Key Insights from December 2025

• - Global Demand: Overall demand for manufacturing inputs remained weak at the close of 2025, particularly impacting Western economies like Germany and North America, which were heavily affected by declines in Mexican manufacturing activities.
• - Inventories: Reports indicate that stockpiling trends remain below average due to robust item availability, keeping price pressures manageable.
• - Material Shortages: Interestingly, the frequency of material shortages dipped below the long-term average, indicating more stable supply availability.
• - Labor Shortages: Conversely, labor shortages hit a 14-month high, introducing pressures on production due to insufficient staffing, particularly prevalent in Europe.
• - Transportation Costs: Global transportation costs remained consistent with historical averages, reflecting a stable logistics environment for the time being.

Conclusion

As GEP experts suggest, the dynamics of GDP growth in the U.S. may not fully represent the underlying caution manufacturers feel; many are preemptively cutting purchases and adjusting inventories in anticipation of lower demand in 2026. This sobering sentiment underscores the need for robust strategic responses in procurement and supply chain management to navigate through potentially tougher economic waters. As the index remains a critical tool in assessing market health, stakeholders across industries must remain vigilant and adapt their strategies to the prevailing economic indicators for the upcoming year.

For those looking for further insights and historical data on the Volatility Index, subscriptions are available, detailing trends and metrics that have unfolded since January 2005. The next release of the GEP Global Supply Chain Volatility Index is scheduled for February 11, 2026.