North America Pulls Back in Manufacturing Demand

GEP Global Supply Chain Volatility Index shows that global supply chains remained underutilized in November, with manufacturers continuing to limit purchasing, signaling a weakening outlook for the start of 2026. 

The headline index came in at –0.29, signaling another month of slack capacity across global suppliers. The sharpest pullback occurred in North America, where the regional index fell, driven by a contraction in input demand as manufacturers cut orders ahead of the new year.

“Companies are watching the U.S. Supreme Court closely, and most expect a pause or rollback in tariffs,” says John Piatek, VP, consulting, GEP. “With supply chains this slack, it remains a buyers’ market heading into 2026, and companies have real leverage to secure favorable terms for the year ahead.”

Key takeaways:

·        Asia continued to report underutilized supply chains, as firms held back on purchasing, driven largely by a further pullback in Chinese factory buying amid soft global demand. However, there were pockets of strength across the region, particularly among the ASEAN nations.

·        Across Europe and the UK, spare capacity ticked higher as demand fragility persisted. Factories in Germany and France once again displayed a reticence to expand purchasing, instead opting to make more aggressive cutbacks.

·        With excess capacity firmly in place globally, the data suggest companies will face limited purchasing cost pressures in the months ahead, excluding tariff-related effects. Shortages remain minimal, stockpiling activity low, and manufacturing backlogs largely flat, highlighting a supply landscape still characterized by slack rather than strain.

·        For North America, the index fell to -0.53, from -0.45, indicating the highest degree of underutilized supplier capacity since March. The data point to a weakening near-term outlook for North American manufacturing. 

·        Global factories’ purchases of commodities, intermediate goods and other components necessary for production slowed again in November. The slump reflected a pullback in factory buying across China, demand-side manufacturing weakness in the United States and a persistent drag from major European industrial economies such as Germany.

·        Reports from global procurement managers of an increase in stockpiling due to price or supply fears remain historically low, indicating limited concern about purchasing price inflation or shortages. The data continue to demonstrate a preference among manufacturers for lean warehouses.

·        The global item shortages tracker remains well below its long-term trend level, signaling healthy supply levels for the world’s manufacturers. Factories will have little, if any, challenges in sourcing vendors for commodities, components and other intermediate products.

·        The labor shortages tracker remained only marginally above its long-term trend during November, indicating negligible pressures on production capacity due to a lack of workers.

·        Global transportation costs ticked higher in November but recorded broadly in line with their historical average.