#United States #Manufacturing #Supply Chain #Clark #GEP

North American Manufacturers Cut Orders

In a notable shift, North American manufacturers have significantly decreased their raw material and intermediate goods purchases as of October 2025, according to the latest data from the GEP Global Supply Chain Volatility Index. This decline, reported as the steepest since May, points towards a possible slowdown in production within the region, highlighting the effects of a global environment characterized by underutilized supply chains.

The GEP Global Supply Chain Volatility Index utilizes data derived from a comprehensive survey involving 27,000 businesses worldwide. In October, the Index registered at -0.33, indicating that supply chain capacity is not being fully utilized and reflects a growing trend of reduced purchasing across various sectors.

Regional Breakdown of Findings

The overall reduction in orders can be largely attributed to the aftermath of a period driven by tariff-induced stockpiling that occurred earlier in the year. Many North American firms are now opting to decrease both their inventory levels and their raw material purchases. This indicates a calming of previously high-demand levels, suggesting a shift towards leaner inventory practices.

Further analysis shows that manufacturers within North America are signaling concerns about future production activity as they pulled back various types of purchases. With indications of manufacturing slowing down, forecasts tend to show a cooling trend in production during the upcoming months, particularly as companies continue to navigate through the immediate effects of market volatility and price pressures from tariffs.

A Look at the Global Landscape

Asia's manufacturing environment similarly displayed signs of deceleration, particularly with reduced purchasing activity from Chinese factories. If China's sharp decrease in buying continues, it could lead to considerable spare capacity across suppliers throughout the Asian continent. In contrast, India has shown moderate strength; however, the general momentum is notably fading, as evidenced by the pooled data.

Across the Atlantic in Europe, signs of recovery within the manufacturing sector are apparent, but progress remains slow. Countries like Germany, France, Italy, and the United Kingdom still experience high levels of underutilized capacity, leading to limited raw material purchasing practices and reflecting a sluggish pace of industrial recovery.

Commentary from Industry Experts

Michael DuVall, Vice President of Consulting at GEP, noted that, “North America is seeing the clearest sign yet of a manufacturing pullback. Manufacturers are buying less and working down inventories, indicating a weaker production outlook through the winter. However, due to ample global supply capacity, we do not foresee significant price pressures beyond existing tariffs.”

Implications for the Market

The decline in orders across the manufacturing sector across key markets indicates a potentially softer outlook for producers in the near term. Reports suggest that the previous spike in factory purchasing in September was not sustainable, as many manufacturers are reporting slowdowns in commodity, component, and intermediate goods orders.

Moreover, the global tracking of item shortages signals that supply levels remain healthy for manufacturers worldwide. The low level of backlogs for resources suggests improved conditions for sourcing vendors across various segments.

Labor-related capacity constraints have increased slightly, with reports of backlogs due to labor shortages reaching a four-month high. Still, this is occurring within a context that remains marginally above its historical average for labor-related issues.

Transportation costs have also seen a small decrease, remaining just below historically average levels, providing some relief for manufacturers concerned about logistics expenses.

Conclusion

The findings from the GEP Global Supply Chain Volatility Index depict a landscape where North American manufacturers, reacting to a variety of economic signals, are choosing to adopt more conservative purchasing strategies. As global supply chains remain underused, the outlook for manufacturing in North America appears muted as companies brace for a season of lower production and heightened economic caution, all while keeping a careful eye on emerging trends in costs and availability of materials.