Chinese manufacturers significantly increased purchasing in September, driving Asia’s supply chains to their busiest level since June 2022, according to the GEP Global Supply Chain Volatility Index. This surge in China manufacturing activity contributed to the fastest rise in global factory procurement since mid-2022, even as the overall index remained slightly negative at -0.38, indicating that global supply chains are still operating below full capacity. In contrast, North American manufacturers scaled back purchasing due to tariff-related disruptions and a softer economic outlook, while Europe’s supply chain activity weakened to its lowest point since March.
Regional Divergences in Supply Chain Activity
Asia, led by China, saw a notable uptick in factory purchasing, with input demand reaching its strongest level in ten months, pushing regional supply chains toward near-full utilization. This reflects ongoing economic growth in the world’s second-largest economy, where increased buying supported higher production and sales. Meanwhile, North American supply chains lost momentum, as manufacturers cited delays from tariffs and concerns over the economic environment, leading to reduced inventory buffers and procurement. Europe’s industrial sector continued to struggle, with Germany, France, and Italy reporting softer purchasing trends, contributing to a six-month low in the region’s index.
Global Supply Chain Indicators
Demand conditions showed a revival in September, with global factory purchasing making its strongest gains since June 2022, largely fueled by Asia supply chains. However, this was offset by constrained demand in North America and Europe, highlighting regional disparities. Inventories data indicated that manufacturers worldwide are becoming less concerned about price inflation or supply shortages, as the frequency of precautionary stockpiling decreased. Material shortages were minimal, with robust availability of commodities and components, while labor shortages and transportation costs remained at historically normal levels, easing operational pressures for global supply chains.
The GEP index, based on a monthly survey of 27,000 businesses, tracks factors such as demand, shortages, and backlogs, with values above zero indicating stretched supply chain capacity. John Piatek, Vice President of Consulting at GEP, noted that higher prices, tariff pressures, and slower growth have become the new normal, urging supply chain leaders to implement revised strategies in this stabilized yet challenging environment.
