GEP: How do Global Manufacturing Supply Chains Fair in 2026?

GEP has published its latest Global Supply Chain Volatility Index, revealing a significant surge in global manufacturing demand that reached its highest level since May 2022.

The index, which serves as a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on monthly surveys of 27,000 businesses, showed a marked bounce back in procurement activity throughout January 2026.

For many of the world's largest economies, procurement activity expanded, driving the strongest rise in worldwide demand for commodities, raw materials and components since February 2022.

This upturn could signal renewed confidence among supply chain leaders as they navigate ongoing global uncertainties.

Asian manufacturing drives recovery

Industrial firms in major economies including China, Japan, Korea, India and across Association of Southeast Asian Nations (ASEAN) markets underpinned the expansion, showcasing broad-based strength across the region.

This Asian-led recovery could indicate a shift in global supply chain dynamics as manufacturers in these markets stepped up their purchasing activity in January 2026.

In North America, momentum has returned following a slowdown through the final quarter of 2025. This was driven by a pick-up in the US manufacturing economy, with factory leaders across the continent showing greater appetite for inventory building.

According to John Piatek, Vice President, Consulting at GEP, this could suggest confidence in order pipelines despite broader economic concerns.

"After several months of treading water, January's data points to a broad-based recovery across US manufacturing, spanning all sectors," John says.

"Despite tariffs and trade uncertainty, manufacturers are showing real resilience, supported by a declining cost of capital that's giving procurement teams greater flexibility to adjust sourcing and inventories."

In Europe, firms within the manufacturing sector continued showing nervousness about overstocking warehouses. However, a cooling of the downturn in purchasing activity tentatively points to an improving outlook for the region's supply chains.

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Regional supply chain performance

Asia's index rose to 0.12 from -0.20, signalling that the supply chains of the region's manufacturers were their busiest since November 2024 in January 2026.

North America's index climbed to 0.06 from -0.37, indicating capacity at the continent's suppliers was the most stretched since July 2024.

Europe's index dropped to -0.27 from -0.17, signalling greater spare capacity at the region's suppliers than in December 2025.

The UK's index fell to -0.17 from 0.12, pointing to a weakening of the country's manufacturing sector as its supply chains were underutilised in January 2026.

Demand for commodities, raw materials and intermediate goods rose by its strongest margin since February 2022 during January 2026.

Asia was a key component of this upturn, with buying growth seen across multiple markets, although US manufacturers also expanded procurement activity.

Globally, reports of manufacturers intentionally stockpiling due to price or supply worries were muted, which could suggest that procurement leaders are not overly concerned about product price inflation or supply disruptions.

Regional differences emerged, however, with inventory building rising in North America while destocking continued in Europe.

The global items in short supply indicator stayed below its long-run average, as has been the case since August 2023.

This could mean that global businesses are experiencing shortages less frequently than normal, providing greater predictability for supply chain planning.

Labour shortages did not appear to be a limiting factor for global production, as manufacturers' reports of backlogs increasing due to lack of staff remained below historically typical levels during January 2026.

However, with global oil prices rising in January 2026, the latest data pointed to an increase in transportation costs at the start of the year.

The GEP Global Supply Chain Volatility Index is a collaborative effort between S&P Global and GEP, drawing from S&P Global's Purchasing Managers' Index (PMI) surveys distributed to 27,000 companies worldwide.

A positive value indicates strained supply chain capacity and increased volatility, while a negative value suggests underutilised capacity and reduced volatility.