Manufacturing Trends Indicate a Decline in Purchasing Activity
Recent assessments from the GEP Global Supply Chain Volatility Index highlight a concerning downturn in purchasing activity among manufacturers across both North America and Europe. As we approach the new year, this trend indicates a softening outlook for companies focused on producing goods in these regions.
Purchasing Declines: Impacts on Goods Producers
In particular, North American manufacturers have reported a striking reduction in procurement efforts, reaching their highest contraction since mid-2025. For six months straight, activity continued to decline, emphasizing a broader regional slowdown. Mexico has experienced the most significant downturn, highlighting just how widespread this reduction is among manufacturers.
European Market Observations
Across the Atlantic, European factories have similarly recorded declining purchasing levels, marking the sharpest decrease in nine months. Germany, a pivotal player in the European manufacturing scene, has seen substantial cutbacks in orders due to an overall lack of demand, adversely affecting its manufacturing landscape.
Resilience in Asian Supply Chains
While North America and Europe struggle with declining demand, Asian manufacturers display a more resilient performance. Countries like South Korea and Vietnam have shown improvements in their production input purchasing, while Chinese factories have stabilized their buying activities, supporting a healthier manufacturing environment in this region.
According to John Piatek, Vice President, Consulting at GEP, "Although the U.S. economy reports strong GDP growth, the reality for manufacturers is more complex. Many North American and European companies are preparing for a decrease in demand in 2026, leading to cautious purchasing and inventory management. The excess in supply chain capacity is proving beneficial for buyers as they are able to negotiate better pricing and contracts."
December 2025 Regional Insights
The gathered data for December 2025 presents several network insights:
- Asia: The index decreased slightly to -0.20 but still indicates resilience, supported by positive growth trends in core countries like South Korea, Vietnam, and Taiwan.
- North America: The index stood at -0.37, highlighting continuing underutilization across suppliers. Purchasing activities weakened further in December.
- Europe: Despite a rise in the index to -0.17, the purchasing volumes have significantly deteriorated, especially in Germany.
- U.K.: The index turned positive at 0.12, suggesting an increase in supplier capacity for the first time in over a year.
Key Findings from December 2025
- Demand: The global demand for essential factory inputs remained weak towards the end of 2025, with North America's purchasing activity particularly subdued.
- Inventories: Stockpiling concerns were below historical averages, with global availability remaining strong, alleviating price pressures.
- Material Shortages: The indicator for material shortages was lower than average, suggesting fewer occurrences of scarcity in global markets.
- Labor Shortages: The labor shortage index reached a 14-month high in December, emphasizing rising capacity challenges primarily in Europe.
- Transportation Costs: Costs associated with transportation were consistent with long-term trends, showing little variation during this period.
In conclusion, as we approach 2026, the insights derived from the GEP Global Supply Chain Volatility Index suggest a fragile state for manufacturing industries in North America and Europe. Companies are advised to remain vigilant as they navigate these tumultuous economic waters.
Frequently Asked Questions
What does the GEP Global Supply Chain Volatility Index track?
The index tracks demand conditions, shortages, transportation costs, inventories, and backlogs across global supply chains.
How did North American and European manufacturers perform in December 2025?
Both regions reported notable declines in purchasing activity, with North America experiencing its sharpest downturn in nearly six months and Europe reporting its most significant decrease in nine months.
Which countries in Asia showed resilience in manufacturing?
South Korea, Vietnam, and Taiwan demonstrated positive growth, alongside steadier performance from Chinese factories.
What are the implications of the declining Purchasing Index?
The declines indicate a challenging environment for producers, with expectations of reduced demand anticipated for 2026.
Who is GEP and what services do they offer?
GEP is a company that provides AI-powered procurement and supply chain solutions, helping enterprises operate efficiently and gain competitive advantages in their fields.
