Key Insights: GEP Global Volatility Index August 2025
The GEP Global Supply Chain Volatility Index, a leading economic indicator based on a monthly survey of 27,000 businesses, slipped to -0.39 in August from -0.35 in July, signalling rising spare capacity as global supply chain activity cooled.
However, the global figure hides stark regional contrasts. North America was the outlier, as supply chains were running almost to full capacity as companies there looked to stockpile raw materials and components to protect against tariff-driven shortages and delivery delays.
This was particularly true of the US consumer goods industry.
Asia weakens whilst Europe faces sharp manufacturing decline
Elsewhere, the index in Asia fell to a three-month low. Purchasing activity weakened in China's consumer non-cyclicals sector, but the region's weakness was predominantly across Japan and Taiwan.
In Europe, Germany's basic materials sector faltered and, in the UK, manufacturing plunged deeper into contraction. The index here (-0.90) reflected one of the steepest declines since 2024.
Michael DuVall, GEP's Global Head Of Supply Chain Strategy, says: "So far, tariffs have neither spurred growth nor triggered collapse.
"Tariff uncertainty is no longer a temporary; it's a structural reality in the supply chain. Companies need to manage it by reinvesting in resilience, diversifying suppliers and building critical capabilities like demand sensing to make faster, smarter decisions."
- North America's supply chains got busier, with businesses stockpiling components to guard against tariff-driven shortages and price inflation
- Asia's manufacturers cut purchases, led by Japan, Taiwan and, to a lesser extent, China
- Europe weakened further, dragged down by Germany and sharp downturn in the UK
Growing supply chain divergence
ASIA: Index fell to a three-month low, indicating rising spare capacity across Asia's supply chains as purchasing volumes in China were flat. In contrast, South Korea, Indonesia and particularly India saw greater factory procurement activity.
NORTH AMERICA: Supply chains were practically running at full capacity as recent orders were delivered and companies added to stock.
EUROPE: Index fell again as factories purchased fewer intermediate goods and destocked. Data continued to highlight the fragile nature of Europe's industrial recovery.
UK: Index falls sharply as UK manufacturers cut back on procurement and inventories.
How the GEP Global Supply Chain Volatility Index works
The GEP Global Supply Chain Volatility Index is a collaborative effort between S&P Global and GEP.
It draws from S&P Global's PMI surveys, which are distributed to 27,000 companies worldwide, a weighted aggregation of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators provided by S&P Global.
A positive value in the GEP Global Supply Chain Volatility Index indicates strained supply chain capacity, leading to increased volatility. The higher the value, the greater the strain on capacity.
Conversely, a negative value suggests underutilised supply chain capacity, resulting in reduced volatility. The lower the value, the greater the degree of capacity underutilisation.
A value above 0 indicates that supply chain capacity is being stretched and supply chain volatility is increasing. The further above 0, the greater the extent to which capacity is being stretched.
A value below 0 indicates that supply chain capacity is being underutilised, reducing supply chain volatility. The further below 0, the greater the extent to which capacity is being underutilised.
