The GEP Global Supply Chain Volatility Index, a key measure of demand conditions, shortages, transportation costs, inventories, and backlogs, recorded a value of -0.21 at the beginning of 2025. This figure suggests that global supply chains are operating near full capacity.
John Piatek, GEP’s vice president of consulting, commented on the findings: “January’s rise in manufacturers’ procurement across APAC and the U.S. signals steady growth ahead in Q1.” He noted that companies globally are cautious about tariffs and are not immediately increasing buffer inventories. Western firms are investing in China-plus-one strategies to diversify manufacturing and distribution. Piatek also highlighted concerns for European manufacturers due to ongoing sector contraction and potential revenue losses in China for U.S. businesses because of trade tensions.
A significant increase in procurement activity was observed in North America, driven by U.S. manufacturers. In contrast, Mexican and Canadian factories reduced procurement due to a negative short-term outlook.
In Asia, producers increased input demand to meet production needs, with notable activity from China and India. South Korea reported significant growth in January.
Europe’s industrial economy continues to face challenges with substantial spare capacity across supply chains. Factories in Germany, France, Italy, and the U.K. reduced material purchases in January.
The data from the Global Supply Chain Volatility Index was collected before recent tariff announcements by the U.S., including those affecting China as well as Mexico and Canada.
Key findings for January 2025 include:
– Demand: Global purchasing of raw materials is recovering after a decline in late 2024.
– Inventories: Manufacturers’ stockpiling remains limited.
– Material Shortages: Reports of shortages were at their lowest level in five years.
– Labor Shortages: Employment levels have been decreasing globally, leading to order backlogs.
– Transportation: Costs reached their highest level in six months.
Regional volatility indices showed varying trends:
– North America: The index rose to -0.22 from -0.53.
– Europe: The index decreased to -0.61 from -0.49.
– U.K.: The index fell to -0.63 from -0.41.
– Asia: The index increased to 0.03 from -0.09.
For further details or historical data dating back to January 2005, visit www.gep.com/volatility or contact [email protected]. The next update will be released on March 12, 2025.
The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP based on surveys sent to around 27,000 companies worldwide.
