Global supply chains showed significant spare capacity in November, with manufacturers scaling back purchasing in a trend that suggests a weakening economic outlook heading into the new year, according to the latest GEP Global Supply Chain Volatility Index.

Why it matters: The widespread slack in supply chains creates a "buyers' market." With ample capacity, low material shortages and minimal stockpiling, companies face little price pressure from suppliers and have more leverage to negotiate favorable terms for 2026.

The big picture: The slowdown is global, with factories in major economies reducing orders for components and materials. This reflects broader demand weakness and a preference for lean inventories. The data indicates that neither material nor labor shortages are putting significant pressure on production capacity.

By the numbers:

  • Global Index: The headline index registered -0.29, indicating underutilized capacity. A value below 0 signals slack in supply chains.
  • North America: The index fell to -0.53, the sharpest pullback of any region and its lowest point since March.
  • Europe: The index dipped to -0.33, driven by purchasing cutbacks in industrial centers like Germany and France.
  • Asia: The index stood at -0.16, with a slowdown in Chinese factory buying weighing on the region, though ASEAN nations showed more resilience.
  • U.K.: The index rose to -0.20 from a previous -0.80, hinting that the country's manufacturing downturn may be stabilizing.
What they're saying: "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,” said John Piatek, vice president of consulting at GEP.

What to watch: The primary exception to low price pressure comes from potential tariffs. According to Piatek, companies are closely watching the U.S. Supreme Court for decisions that could lead to a pause or rollback of existing tariffs, which would further influence purchasing costs.

The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, Jan. 13, 2026.

SOURCE: GEP Global Supply Chain Volatility Index

NOT FOR REPRINT

© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.