GEP index signals manufacturing pullback across North America

North American manufacturers sharply pulled back their purchases of raw materials and intermediate goods in October, pointing to a likely slowdown in factory output heading into winter, according to the latest GEP Global Supply Chain Volatility Index.

The index, based on a monthly survey of 27,000 companies worldwide, shows input demand fell at the fastest pace since May. The October reading came in at -0.33, indicating global supply chain capacity continues to be underused as manufacturers keep inventories lean and limit new purchasing.

In North America, the decline followed months of tariff-driven stockpiling earlier in the year. Companies reported both lower buying and reduced intentional inventory building, easing pressure on supply chains that are running well below full capacity.

Asia also saw momentum fade, as weaker purchasing in China outweighed continued strength in India. In Europe, activity ticked up slightly but suppliers still operated with significant unused capacity, with firms in Germany, France, Italy and the U.K. restricting raw material buying.

“North America is seeing the clearest sign yet of a manufacturing pullback,” said Michael DuVall, vice-president, consulting, GEP. “Manufacturers are buying less and working down inventories, which points to weaker production through the winter. With spare capacity across global supply, we do not anticipate any price pressure, beyond tariffs, on buyers.”

The report’s regional findings show North America’s index falling to -0.45, its lowest since March, while Asia dropped to -0.30. Europe rose to a three-month high of -0.25, and the U.K. saw a sharp decline to -0.80.

The data also point to subdued global demand, historically low levels of price-driven stockpiling, continued ease in sourcing materials, only modest labour-related backlogs and slightly lower transportation costs.