GEP Global Volatility Index: Key Insights June 2025

Global supply chains are running near full capacity as manufacturers brace for the end of the current US tariff pause, according to the GEP Global Supply Chain Volatility Index for June 2025. 

The index, which tracks global supply chain performance through monthly surveys of 27,000 businesses, has jumped to its highest level of the year, pointing to rising pressure across regions.

Manufacturers to beat rising tariffs

The GEP Global Supply Chain Volatility Index, which monitors metrics including inventory levels, shortages, transport costs and order backlogs, rose to -0.17 in June, up from -0.46 in May.

A negative reading means supply chain capacity is underused, while positive numbers reflect strain on the system. Although still in negative territory, this latest figure signals a marked increase in global supply chain activity.

One of the clearest drivers behind this movement is the looming expiration of the current 10% tariffs on goods imported to the US under The Trump Administration.

The approaching deadline has pushed many North American manufacturers into action, with businesses stepping up purchases of parts, components, raw materials and commodities to stay ahead of potential cost rises.

Demand across Europe has also rebounded. For the first time in over two years, European manufacturers are operating at full speed.

German exporters in particular have seen a pickup in both domestic orders and demand from the US, with businesses placing forward orders before tariffs potentially return.

"In June, Europe shook off its long slump and global supply chains ran at full capacity — despite the uncertainty and on-and-off again tariffs," says John Piatek, Vice President of Consulting at GEP.

"It's the calm before the storm. Under the surface, companies are putting in place contingencies: stockpiling inputs, reshaping supplier networks, near-shoring operations and securing supply chain financing to mitigate tariffs after the 'pause' ends."

There is little in the data to suggest that tariffs have caused a sharp jump in costs, with price pressures appearing contained for now.

Transportation costs remain close to their long-term average, and businesses continue to report stability in logistics expenses.

On the workforce side, the survey found that suppliers largely have enough staff to meet current demand.

Reports of order backlogs due to labour shortages remain at typical levels.

Material shortages also appear to be minimal, with robust availability noted globally.

Regional findings

The regional breakdown for June shows clear contrasts.

North America: Index rose sharply to -0.06 from -0.24, meaning that manufacturers there are operating just shy of full capacity.

Asia: Index climbed to -0.27 from -0.40, indicating improvement but also confirming that overall supply chains, particularly in Southeast Asia, are still underused.

Europe: Index climbed from -0.30 to 0.01 – its first positive reading in 2025 – pointing to maximum capacity utilisation across the continent’s supply chains.

UK: The index improved to -0.41 from -0.97, the best figure in seven months. But it still suggests the UK is operating with plenty of spare capacity compared to other regions.

June’s data also highlights how procurement teams are responding to market concerns.

Reports of stockpiling have increased as businesses try to shield themselves from cost and supply risks.

Warehouse safety buffers are at their highest level this year, reflecting a move to build up reserves before any changes in tariffs take effect.

How the index works

The GEP Global Supply Chain Volatility Index is developed by GEP and S&P Global, using data from the Purchasing Managers' Index (PMI).

The PMI surveys 27,000 businesses across industries each month, with the index drawing from six aggregated sub-indices that measure demand, supply, inventory, transport and cost conditions.

A reading above zero indicates that global supply chains are stretched, with not enough capacity to meet demand.

The higher the value, the more volatile conditions become. A reading below zero, by contrast, suggests excess capacity, meaning supply chains are under less strain.

As of June, demand for manufactured goods continues to rise globally, especially in the US, where firms are stepping up purchases in anticipation of renewed tariffs.

Inventory levels are rising in response, and businesses are navigating this moment with precautionary strategies.