Unpacking GEP's Global Volatility Index for August 2025
The GEP Global Supply Chain Volatility Index, which tracks supply chain activity worldwide, shows continued disruption in August 2025.
The index measures the balance between demand and capacity using surveys of 27,000 companies, and slipped to -0.39 in August from -0.35 in July. This decline points to rising spare capacity and reduced supply chain activity globally, but the picture varies sharply by region.
North America stands apart, with supply chains there running close to full capacity. Companies responded to tariff risks by stockpiling raw materials and components to avoid shortages and delays.
The pressure is most visible in the US consumer goods sector, where demand for inputs remains high as businesses shield themselves from tariff-driven uncertainty.
Regional variation
Asia’s supply chain activity declined as the index fell to a three-month low.
Companies in Japan and Taiwan scaled back purchasing while China’s consumer non-cyclicals sector also weakened. Across the region, supply chains operated below capacity, signalling a cautious approach to procurement.
Europe recorded an even sharper downturn. Germany’s basic materials industry faltered and the UK experienced one of its steepest manufacturing declines since 2024.
The UK index plunged to -0.90 as factories cut procurement and reduce inventories, highlighting a fragile recovery across the region. Companies in Europe purchased fewer intermediate goods and continue to destock, underscoring limited confidence in demand.
Michael DuVall, GEP's Global Head of Supply Chain Strategy says: "So far, tariffs have neither spurred growth nor triggered collapse. Tariff uncertainty is no longer a temporary; it's a structural reality in the supply chain.
"Companies need to manage it by reinvesting in resilience, diversifying suppliers and building critical capabilities like demand sensing to make faster, smarter decisions."
- North America's supply chains got busier, with businesses stockpiling components to guard against tariff-driven shortages and price inflation
- Asia's manufacturers cut purchases, led by Japan, Taiwan and, to a lesser extent, China
- Europe weakened further, dragged down by Germany and sharp downturn in the UK
Diverging supply chain pressures
The data highlights widening divergence between regions. In North America, supply chains were stretched near capacity as companies fulfilled orders and expand stockpiles. In contrast, Asia and Europe struggled with underutilisation, where factories scaled back purchasing and freed up capacity.
Asia: The index fell, with spare capacity building as China stayed flat and Japan and Taiwan weakened. India and Indonesia were exceptions, adding momentum to procurement.
North America: Activity rose sharply as businesses loaded inventories against tariff-driven risks, keeping supply chains close to maximum use.
Europe: Supply chains contracted further, with manufacturing weakness in Germany and a deeper downturn in the UK weighing on procurement.
These regional contrasts show how global trade policy and economic conditions reshape supply chain behaviour, creating excess capacity in some areas while straining operations elsewhere.
How the volatility index measures supply chains
The GEP Global Supply Chain Volatility Index is produced in partnership between S&P Global and GEP. It draws on data from S&P Global’s Purchasing Managers’ Index (PMI) surveys, which cover 27,000 firms worldwide.
Six sub-indices feed into the model, including PMI data, PMI Comments Trackers and commodity price and supply indicators.
The index uses a simple scale:
A positive value means supply chain capacity is stretched, with increased volatility as demand exceeds available resources.
A negative value means capacity is underused, reducing volatility as supply chains operate below full utilisation.
The further the value rises above zero, the greater the strain; the further it falls below zero, the greater the underutilisation.
