GEP Index Shows Construction Materials Demand Surges

The GEP Global Supply Chain Volatility Index has revealed a marked bounce back in procurement activity during January.

This leading indicator tracks demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses. For many of the world's largest economies, procurement activity expanded.

This upward movement saw the strongest rise in worldwide demand for commodities, raw materials and components in almost four years.

A number of industrial firms in major economies underpinned this expansion. This included activity in China, Japan, Korea, India and across ASEAN markets which showcases a broad-based strength across the region.

Momentum has also been gained in North America into the new year following a slowdown through the final quarter of 2025. This was driven by a pick-up in the US manufacturing economy.

Factory leaders across the continent also showed a greater appetite for inventory building, suggesting a certain degree of confidence in order pipelines.

In Europe, firms within the manufacturing sector are serving as a contrast, as they are still showing nervousness to overstock warehouses. However, a cooling of the downturn in purchasing activity tentatively points to an improving outlook.

"After several months of treading water, January's data points to a broad-based recovery across US manufacturing, spanning all sectors," says John Piatek, Vice President, Consulting, GEP.

"Despite tariffs and trade uncertainty, manufacturers are showing real resilience, supported by a declining cost of capital that's giving procurement teams greater flexibility to adjust sourcing and inventories."

Regional supply chain findings

According to the data released for January 2026, there are distinct regional variations in supply chain utilisation.

In Asia, the index rose to 0.12 from -0.20, signalling that the supply chains of Asia's manufacturers were their busiest since November 2024.

In North America, the index rose to 0.06 from -0.37. This indicates capacity at North America's suppliers was the most stretched in just over a year-and-a-half.

Conversely, the situation in Europe appears different. The index dropped to -0.27 from -0.17 which signals greater spare capacity at Europe's suppliers than at the end of 2025.

Furthermore, the UK index fell to -0.17 from 0.12. This points to a weakening of the UK's manufacturing sector as its supply chains were underutilised at the start of 2026.

Global demand and inventory

Global demand for intermediate goods, raw materials and commodities rose by its strongest margin in almost four years during January. This occurred as manufacturers in major economies stepped up their purchasing activity at the start of 2026.

Asia was a key component of this upturn, with buying growth seen in China, Japan, Korea, India and across ASEAN, although US manufacturers also expanded procurement.

Regarding inventories, reports of manufacturers intentionally stockpiling due to price or supply worries were muted globally. This suggests that procurement leaders are not overly concerned about product price inflation or supply.

Regional differences emerged, however, with inventory building rising in North America whereas destocking continued in Europe.

The global items in short supply indicator stayed below its long-run average, as has been the case for nearly two-and-a-half years. This means that global businesses are experiencing shortages less frequently than normal.

Furthermore, labour is not a limiting factor for global production. Global manufacturers' reports of backlogs increasing due to a lack of staff were below historically typical levels during January.

However, with global oil prices rising in January, the latest data pointed to an increase in transportation costs at the start of the year.

Understanding the index methodology

The GEP Global Supply Chain Volatility Index represents a collaborative effort between S&P Global and GEP. It draws from S&P Global's PMI surveys which are distributed to 27,000 companies worldwide.

It is a weighted aggregation of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators provided by S&P Global.

A positive value in the index indicates strained supply chain capacity which leads to increased volatility. The higher the value, the greater the strain on capacity.

Conversely, a negative value suggests underutilised supply chain capacity resulting in reduced volatility. The lower the value, the greater the degree of capacity underutilisation.

Ultimately, values above zero indicate stretched capacity and increasing volatility, while values below zero signal underutilisation and reduced volatility, with the distance from zero reflecting the extent of the strain or slack.