The increase in Asia is attributed to a sharp rebound in procurement activity, particularly in China, as manufacturers responded to rising new orders. The surge likely reflects increased production needs spurred by domestic stimulus measures and international clients stockpiling to mitigate potential higher import costs under the Trump administration, S&P Global said in a press release.
Only India saw a greater rise in raw material purchases than China in November. Data also highlighted that factory procurement activity across Asia grew at its fastest pace in three-and-a-half years, signalling preparations for further production increases.
The GEP Global Supply Chain Volatility Index rose to -0.20 in November, the lowest spare capacity since June, driven by Asia’s rising procurement activity, particularly in China and India.
North America saw increased safety stockpiling ahead of potential tariffs, while Europe faced weakening demand amid a worsening industrial recession.
Manufacturers are planning to overcome trade challenges.
In North America, reports of safety stockpiling were at their most pronounced since July, highlighting how procurement managers have already implemented changes to their inventory strategies because of the incoming US administration’s public commitment to impose significant tariffs. Subsequently, a pickup in activity across North American supply chains resulted in fewer vendors with idle capacity. In fact, our index tracking the region’s supply chain activity hit a four-month high in November.
Meanwhile, in Europe, suppliers feeding this part of the world saw spare capacity rise further — a contrast to elsewhere — primarily because of the continent’s worsening industrial recession. Factories went deeper into retrenchment mode, according to our data, as demand for inputs from manufacturers here was its weakest since December 2023. Germany continues to be at the forefront of this prolonged and significant slowdown.
“In November, US manufacturers, particularly in the consumer goods sector, increased their safety stocks to help blunt any immediate tariff increases,” said John Piatek, vice president, GEP. “In contrast, Chinese manufacturers are getting busier because of government stimulus and growth in exports, led by automotives and technology products. Strategically, many global companies have a wait-and-hope approach, while simultaneously planning to remake their global supply chains to respond to a tariff and trade war in 2025 and beyond.”
The GEP Global Supply Chain Volatility Index is a leading indicator for tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses.
Fibre2Fashion News Desk (SG)
