Global manufacturers sharply reduced their purchases of raw materials, components and commodities in April, marking the steepest monthly decline in 2025 so far, according to the GEP Global Supply Chain Volatility Index. The drop was most pronounced in North America and Asia, as firms responded to growing concerns around tariffs and weakening demand by scaling back input buying and adjusting supply chain strategies.

The index, which draws from S&P Global’s PMI survey data from 27,000 businesses across more than 40 countries, flagged an “accelerated reduction” in manufacturers’ input demand across all major regions. April’s data suggest a clear retrenchment in purchasing activity, particularly in North America, where firms are front-loading orders and stockpiling in anticipation of worsening trade conditions.

“The first blows of the tariff war have landed on global manufacturers,” said John Piatek, vice president, consulting at GEP. “Stockpiling is accelerating at a concerning rate and the first signs of manufacturers anticipating slower demand and supply shortages have emerged.”

North America braces for disruption

North American manufacturers were among the most affected in April, with firms significantly increasing inventory buffers. Many warehoused materials ordered earlier in the year, effectively front-loading Q1 procurement to get ahead of anticipated tariff hikes. The data suggest a renewed focus on supply chain resilience, but also signal reduced confidence in near-term demand growth.

Despite this rise in stockpiling, overall purchasing activity declined steeply, indicating that manufacturers are shifting towards a more defensive posture. Labour shortages and backlogs remain under control, with the index reporting no widespread signs of staff capacity issues or material-driven production delays.

Asia slows as spare capacity builds

Asian supply chains also showed clear signs of slowdown, particularly in China, Taiwan and South Korea. The index reported a marked increase in spare capacity across the region, suggesting a broad-based dip in factory utilisation. This slowdown reflects both softening global demand and a cautious stance from regional producers as tariff concerns continue to ripple through international trade.

Purchasing activity in Asia declined further in April, deepening the trend seen in March. While material availability remains strong as global item shortages stayed below their long-term average, the region’s manufacturers appear to be opting for leaner stock levels rather than building buffers.

Europe shows tentative signs of improvement

In contrast to retrenchment in North America and Asia, Europe’s manufacturing sector showed early signs of stabilisation. Supply chain capacity was underutilised to the smallest degree in ten months, reflecting modest growth in key markets such as Germany and France. Although demand remains subdued, the region’s relative improvement suggests that the industrial downturn may be starting to ease.

European manufacturers continued to favour lean inventories, and the region recorded fewer instances of safety stockpiling. This disciplined approach is in line with firms' cautious optimism, though the outlook remains vulnerable to further trade shocks.

The UK, however, stood out as a clear laggard. The index registered a sharp drop in supplier activity, ranking among the steepest monthly declines in two decades of available data.

Freight demand softens, but no shortages yet

Global transportation costs fell again in April, reaching a seven-month low as the slowdown in demand weighed on freight volumes. The index’s transport price indicator dipped slightly below its long-run average, underscoring weaker logistics demand in the face of falling global trade activity.

Despite declining input purchases and soft freight markets, supply chain resilience remains intact. The index’s item shortages indicator continued to signal robust material availability, suggesting that suppliers have adequate stock to meet existing orders. Reports of backlogs driven by material shortages remain stable and within historical norms.

Labour capacity also appears sufficient to meet current manufacturing needs. The GEP index found no significant increase in production delays caused by staffing shortages.

Methodology snapshot

The GEP Global Supply Chain Volatility Index is based on six sub-indices derived from S&P Global’s PMI data and indicators, covering purchasing activity, supply shortages, transport costs, stockpiling, and production backlogs. These components are combined using a weighted z-score model to capture month-on-month volatility in global supply chain conditions.

The index tracks sentiment and activity across more than 27,000 companies in over 40 countries, accounting for 89% of global GDP.

Looking ahead

April’s data underscore the growing impact of tariff tensions on global manufacturing. The sharp reduction in input demand, particularly in North America and Asia, suggests firms are preparing for prolonged uncertainty in trade conditions. While Europe’s modest improvement offers a glimmer of relief, global purchasing trends continue to point downward.

For CFOs and corporate treasurers, the data add weight to the case for scenario planning around trade disruption and inventory strategy. With transportation costs easing and material supply still stable, the near-term focus is likely to remain on preserving margins, managing exposure to tariff-related volatility, and maintaining flexibility in procurement planning.