**North America**: In March 2025, the GEP Global Supply Chain Volatility Index fell to -0.51, the lowest in five years, indicating excess capacity. Manufacturers, especially in North America, have reduced purchasing due to tariffs, pointing to a potential downturn in the manufacturing sector.
In March 2025, the GEP Global Supply Chain Volatility Index recorded its lowest value in nearly five years, reaching -0.51, which signals a significant amount of spare capacity in global supply chains. This finding reflects a cautious atmosphere among manufacturers worldwide, particularly in North America, where factories have reportedly reduced purchasing activity due to the impact of tariffs.
John Piatek, vice president of consulting at GEP, commented on the situation, stating, “March’s sharp decline in supplier activity was due to the stifling effect of tariffs and tariff-related uncertainty, which had its strongest impact in North America, where manufacturers reported cutbacks to purchasing activity and inventories.” He noted that many companies had adopted a “wait-and-see” approach but are now looking for ways to manage costs and mitigate risks within their supply chains.
In Canada, the decline in purchasing activity was particularly pronounced, while the UK has seen supplier activity contract at a rate seldom experienced in the last 25 years. With spare capacity rising for the fourth consecutive month, UK factories have begun aggressively destocking, which suggests a potential downturn in the manufacturing sector.
The volatility index for Europe also showed significant underutilisation in supply chains, although there are early signs of recovery as the deterioration in input demand eased. Conversely, supply chains in Asia are reportedly operating close to full capacity, with a slight increase in procurement activity attributed to growth in China and India.
Overall, manufacturers worldwide have shown a marked reluctance to increase inventories, with stockpiling levels noted at their lowest since July 2016. Reports indicate that labour shortages remain manageable, and transportation costs have seen a decline, positioned near long-term averages.
Despite the differential geographical performance within the global market, the latest data represents a critical moment for manufacturers, highlighting the ongoing uncertainties that stem from trade fluctuations and economic conditions.
Source: Noah Wire Services
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