The GEP Global Supply Chain Volatility Index continued to point to underutilized capacity across global supply chains in the final month of 2025.
Although the global index edged up to -0.17 in December, its highest level since June 2025, underlying data continue to signal softening global manufacturing demand, particularly in North America and Europe, where manufacturers reported sharper pullbacks in purchasing activity. With buffer inventories remaining historically low, the data point to a deteriorating outlook for goods producers across the Western world heading into 2026.
“Strong headline GDP growth in the U.S. is masking a more cautious reality for manufacturers,” says John Piatek, VP, consulting, GEP. “North American and European firms are cutting purchases and inventories, anticipating softening demand in 2026. Excess capacity across global supply chains is giving buyers leverage to secure better pricing and terms.”
Key takeaways:
· In December 2025, North American manufacturers reduced procurement activity at the fastest rate since May 2025, marking the sixth consecutive month of softening input demand. Weakness was broad-based across the region, with Mexico posting the steepest contraction, underscoring a region-wide pullback in manufacturing activity.
· Similarly, European factory purchasing fell further, registering its sharpest decline in nine months, driven primarily by pronounced cutbacks in Germany, where manufacturers continued to scale back orders amid weak demand pipelines.
· In contrast, Asian supply chains showed greater resilience. Demand for production inputs improved in South Korea, Vietnam and Taiwan, while buying activity at Chinese factories
· Global demand for factory inputs such as commodities, intermediate products and raw materials, remained weak at the end of 2025. Purchasing activity was its most depressed in western economies, particularly Germany. North America also saw constrained buying volumes at its manufacturers, with Mexico dragging harshly on the region. By contrast, Asia showed greater resilience in factory purchasing activity.
· Reports of stockpiling due to supply or price concerns remain below average. Global item availability was strong in December, helping to keep price pressures at bay and reducing firms’ needs to hold excess stock in warehouses or build up safety buffers.
· The global items in short supply indicator was below its long-run average in December, as has been the case for over two years. This means that global businesses are experiencing shortages less frequently than normal.
· The labor shortages tracker ticked up to a 14-month high in December and was above its long-run average, indicating a rise in capacity pressures due to a lack of staff. Regional data showed that this was centered on Europe.
· Global transportation costs were in line with their long-term average in December.
