Global Manufacturing Dynamics in 2026
The latest insights from the GEP Global Supply Chain Volatility Index reveal a significant shift in manufacturing demand across the globe as we approach 2026. While spare capacity persists in various regions, manufacturing activity in North America is facing notable challenges, marking the steepest decline in input demand.
North America: A Region in Decline
The Northeastern segment of the manufacturing landscape reported a marked decrease in demand. Companies are tightening their belt, scaling back on orders as they adapt to an economic environment predicting weaker performance in the coming year.
Shifts in Purchasing Behavior
Manufacturers are being conservative in their purchasing decisions, indicating that many are bracing for reduced sales and potential challenges ahead. Organizations’ reductions in orders will likely influence not only domestic supply chains but may also have ripple effects globally.
Europe and the UK Weathering Challenges
Europe, including the UK, displays a subdued manufacturing environment as factories continue to grapple with fragile demand. Manufacturers in Germany and France, among others, are wary of expanding purchasing activities, further intensifying uncertainty in the region's economic outlook.
Resilience Among Larger Economies
Despite these struggles, there are a few bright spots, particularly among certain sectors that are benefiting from unique circumstances. Even so, the overarching trend indicates various European countries continue to face challenges in their manufacturing pipelines.
Asia’s Manufacturing Struggles
In Asia, limitations in demand persist as manufacturers, particularly in China, reduce their purchasing significantly. Nonetheless, countries within the ASEAN group are maintaining some level of resilience, demonstrating that not all regional economies are facing contraction.
The Bigger Picture of Supply Chains
The GEP index noted that the headline figure reached -0.29, indicating that capacity among global suppliers remains underutilized. The ongoing weakness in manufacturing demand can be attributed to sustained reductions in orders, primarily influenced by the unpredictable outcomes faced by manufacturers worldwide.
Global Economic Outlook
With a landscape characterized by slack rather than strain, companies will likely hold off on raising purchasing costs significantly—excluding tariff-related expenses. The current environment allows businesses to strategize with greater leverage. As stated by industry experts, this buyer's market may persist into 2026.
John Piatek, Vice President of Consulting at GEP, emphasizes that the current condition of slack in supply chains gives companies a chance to negotiate favorable terms as they prepare for uncertain economic times ahead.
November 2025 Key Findings Across Regions
- Asia: The index increased to -0.16 from -0.30, suggesting a minor reduction in spare capacity despite China's issues. Nations within ASEAN, including Indonesia and Vietnam, show signs of strength.
- North America: The index decreased dramatically to -0.53 from -0.45, indicating the highest level of underutilized capacity witnessed recently, reflecting a shaky horizon for manufacturing.
- Europe: The index slipped to -0.33 from -0.25, illustrating the fragility that continues to grip the continent’s industrial economy.
- U.K.: Meanwhile, the index rebounded sharply to -0.20 from -0.80, demonstrating signs that the fabricating downturn may be stabilizing.
GEP About the Supply Chain Index
The GEP Global Supply Chain Volatility Index is an essential resource for understanding market dynamics, directly derived from comprehensive surveys disseminated globally. This index compiles responses from approximately 27,000 companies, reflecting significant insights into economic conditions across various regions.
The value above 0 indicates strained supply chains, which reflect increasing volatility, while numbers below zero illustrate an underutilized capacity, indicating stability in pricing and supply.
About GEP and S&P Global
GEP® stands as a leader in offering AI-powered procurement and supply chain solutions aimed at fostering agility and efficacy within enterprises. Their tools and services help global organizations enhance operational efficiency, gain competitive edges, and increase profitability.
Meanwhile, S&P Global (NYSE: SPGI) serves as a vital provider of insights and data crucial for decision-making across numerous sectors, enabling businesses to navigate evolving market challenges effectively.
Frequently Asked Questions
What does the GEP Global Supply Chain Volatility Index measure?
The GEP index measures supply chain efficiency and capacity across global manufacturing based on survey responses from thousands of businesses.
Why is North America experiencing a decline in manufacturing demand?
North America is facing economic uncertainties, prompting manufacturers to cut back on orders, leading to reduced manufacturing demand.
How is Asia's manufacturing sector performing?
Asia's manufacturing is experiencing underutilization, particularly in China, though some nations in the ASEAN region are showing resilience.
What are the implications of an index value below zero?
An index value below zero indicates that supply chain resources are underutilized, suggesting limited price pressures, leading to more stable market conditions.
When can we expect the next GEP index release?
The next release of the GEP index is expected to occur at 8 a.m. ET on January 13, 2026.
