Key Insights: GEP Global Volatility Index October 2025

The latest GEP Global Supply Chain Volatility Index, a leading economic indicator based on a monthly survey of 27,000 businesses, shows a fall in input demand as manufacturers in North America reduce the amount of raw material and intermediate good buying.

The fall in input demand was the steepest seen since May and suggests production in the region is set to cool over the coming months.

The index, which tracks demand conditions, shortages, transportation costs, inventories and backlogs, registered –0.33 in October, indicating that global supply chain capacity remains underused.

Across major economies, manufacturers are keeping their inventories lean while curbing new purchases of inputs.

North America leads inventory drawdown after tariff stockpiling

In North America, the slowdown is off the back of several months of tariff-driven stockpiling, which took place during the earlier months of 2025.

Firms are reporting both lower material purchasing and a reduction in deliberate inventory building, taking pressure off supply chains which are now running well below full capacity.

A shift in momentum is being seen in other regions, such as Asia, which saw its own momentum fade. A pullback in factory buying across China offset continued strength in India, leading to a broader softening across the region.

Europe still underutilised

Europe saw a marginal increase in activity – but suppliers' capacity continued to be underutilised, as firms in Germany, France, Italy and the UK continued to restrict raw material purchasing, underscoring a sluggish industrial recovery.

Michael DuVall, Global Head of Supply Chain Strategy at GEP, says: "North America is seeing the clearest sign yet of a manufacturing pullback.

"Manufacturers are buying less and working down inventories, which points to weaker production through the winter. With space capacity across global supply we do not anticipate any price pressure, beyond tariffs, on buyers."

October 2025 regional key findings

ASIA: Index dropped to -0.30, from -0.06, indicating greater spare capacity across supply chains into and across Asia. This was mostly driven by a slowdown in Chinese manufacturers' purchasing.

NORTH AMERICA: Index fell to its lowest level since March (-0.45 in October, vs. -0.25 previously), signalling capacity at the region's suppliers went underutilised to the greatest extent since prior to April's sweeping tariff announcements.

EUROPE: Index rose to three-month high of -0.25, from -0.53, indicating unused manufacturing capacity as the region's recovery from its protracted industrial downturn remains sluggish.

UK: Sharp drop in index to -0.80, from -0.57, highlighting sharp reduction in activity at the UK's suppliers.

October 2025 key findings

Demand: September's boost in factory purchasing – the strongest seen since June 2022 – was reversed in October as manufacturers in key economies such as China and the US reported slowdowns in procurement. Factories' orders of commodities, components and intermediate goods remained subdued, indicating a soft near-term outlook for producers.

Inventories: Reports from global procurement managers of an increase in stockpiling due to price or supply fears remained historically low, indicating limited concern about purchasing price inflation or shortages. The data continued to demonstrate a preference amongst manufacturers for lean warehouses.

Material Shortages: The global item shortages tracker remained well below its long-term trend level, signalling healthy supply levels for the world's manufacturers. Factories will have little, if any, challenges in sourcing vendors for commodities, components and other intermediate products.

Labour Shortages: There was a modest rise in labour-related capacity constraints during October, with reports of backlogs rising due to inadequate staff supply ticking up to a four-month high. Nevertheless, the labour shortages tracker was only marginally above its long-term trend.

Transportation: Global transportation costs ticked down slightly in October to just below historically average levels.

How GEP's 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.