GEP Index shows global supply chain activity fell in July, driven by a sharp pullback in US manufacturing orders amid tariff concerns and slowing demand expectations.

Global supply chain activity declined in July, according to the GEP Global Supply Chain Volatility Index. The drop was driven by US manufacturers sharply reducing purchases of materials and components after stockpiling in June ahead of the “tariff pause.”

The index dropped to -0.35 in July from -0.17 in June, signaling a rise in unused capacity across global supply chains. With North America's index dropping from -0.06 to -0.33, the United States was the primary cause. The reversal comes after US firms front-loaded orders in June to beat expected tariff adjustments, which caused a spike. US manufacturers drastically reduced their procurement of materials, components, and consumables in July, indicating that future demand would likely drop.

“When businesses stop front-loading stocks and rerouting goods to avoid tariffs, the underlying picture indicates a declining industrial demand globally,” said John Piatek, vice president, consultancy, GEP. According to the July figures, there has been a noticeable decline in orders, and US manufacturers are bracing for future declines in demand.

As South Korea and Japan continue to deteriorate, Asian manufacturing purchasing activity is still a little below trend. Before these two nations signed double-digit tariff agreements with the United States, the majority of the data was gathered. An intensified downturn in Taiwanese manufacturers also affected the rest of the region. Notably, China’s factory purchasing volumes rose in July, reversing the decline seen over the previous two months.