Global supply chain activity slows in July as US factory purchases drop
Global supply chain activity fell in July as US manufacturers sharply pulled back purchases of inputs after stockpiling in June to beat out the Trump administration’s tariff pause, according to a monthly GEP report.
The GEP global supply chain index dropped to -0.35 from -0.17 in June, signaling increased spare capacity. A value above 0 indicates supply chains are being stressed, while a value below 0 means supply chain capacity is being underutilized.
The global drop was mostly driven by US factories front-loading purchases in advance of anticipated tariff changes. North America’s index score fell to -0.33 from -0.06 – with GEP saying the drop in inputs purchases reflects expectations of slowing demand going forward.
“When we remove companies’ front-loading inventories and rerouting goods to avoid tariffs, the underlying picture points to slowing manufacturing demand worldwide,” said John Piatek, vice president, consulting, GEP. “The July data shows a clear pullback in orders, with US manufacturers preparing for lower demand going forward.”
Asia’s index score remained flat, increasing marginally to -0.25 from -0.27. China’s factory buying volumes rose in July, while Japan and Korea slowed purchases – although data was mostly collected prior to those two countries striking tariff agreements with the US.
Europe’s industrial recovery slipped, with the index falling to -0.30 from 0.01. Germany’s rebound stalled ahead of tariff agreements, highlighting the fragile nature of the continent’s industrial recovery.
Safety stockpiling eased in July, signaling limited concern over supply bottlenecks or price surges. Staffing capacity and transportation costs were stable, with no signs of inflationary pressure.
