Key Insights: GEP Global Volatility Index April 2025
GEP Global Supply Chain Volatility Index — a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses — indicated an accelerated reduction in global manufacturers' demand for inputs (raw materials, components and commodities) in April, signaling a broad-based contraction in purchasing activity by region.
April's drop in buying from manufacturers across the world is the sharpest in this calendar year to date, specifically North America and to a lesser extent Asia — as manufacturers scale back in anticipation of weakening future demand as a direct result of tariffs.
John Piatek, Vice President, Consulting GEP, says: “The first blows of the tariff war have landed on global manufacturers. Stockpiling is accelerating at a concerning rate and the first signs of manufacturers anticipating slower demand and supply shortages have emerged.”
Index > 0, supply chain capacity is being stretched. The further above 0, the more stretched supply chains are.
Index < 0, supply chain capacity is being underutilized. The further below 0, the more underutilised supply chains are.
Tariff tensions trigger global manufacturing retreat
North American manufacturers sharply increased inventory buffers in April, warehousing front-loaded Q1 purchases in response to rising tariff concerns, and a renewed focus on supply chain resilience.
Spare capacity across Asian supply chains increased significantly in April as factory slowdowns were evident in many of the region's major markets, led by China, Taiwan and South Korea.
In Europe, there were further signs that the continent's industrial downturn was cooling. Supply chain capacity went underutilised to the smallest degree in ten months, reflecting growth in Germany and France, though risks remain if global trade conditions deteriorate.
The UK once again recorded significant manufacturing weakness, with supplier activity down at a rate which has rarely been surpassed in 20 years of data availability.
- The steep fall in global manufacturers’ purchases signals a likely production slowdown in the near future
- North America factories respond to tariffs by buying less materials and aggressively stockpiling
- Purchasing activity by Asian manufacturers at its weakest since Dec. 2023 as demand slumps across the region’s key exporting hubs
- Bright spot: Europe’s industrial recession is finally coming to an end as spare capacity shrinks further
How does the GEP Global Supply Chain Volatility Index work?
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 underutilized supply chain capacity, resulting in reduced volatility. The lower the value, the greater the degree of capacity underutilisation.
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