Global manufacturing demand hits four-year high in January

Global manufacturing demand rebounded sharply in January 2026, reaching its highest level in almost four years, according to the latest GEP Global Supply Chain Volatility Index. The index, a leading indicator that tracks demand conditions, shortages, transportation costs, inventories and delays at 27,000 companies worldwide, pointed to a sharp rebound in procurement activity at the beginning of the year.

Purchasing volumes increased in many major economies, driving the largest increase in global demand for raw materials, raw materials and components since May 2022, S&P Global said in a news release.

Global manufacturing demand rose in January 2026 to its highest level in nearly four years, led by Asia and supported by renewed momentum in North America, according to the GEP Global Supply Chain Volatility Index. Procurement activity increased markedly, while material and labor shortages remained moderate. Europe lagged behind but showed timid stabilization.

Asia led the recovery, with manufacturers in China, Japan, South Korea and India increasing material purchases in response to improving order books. Across the region, the index rose to 0.12 in January from -0.2 in December, indicating supply chains were at their most active since November 2024. ASEAN markets also contributed to the expansion, underscoring broad-based regional strength.

North America regained momentum after a weaker fourth quarter in 2025. The regional index rose to 0.06 from -0.37, indicating supplier capacity was the tightest in more than 18 months. U.S. manufacturers increased purchasing activity and showed a greater appetite for inventory building, reflecting confidence in orders and the resilience of the industrial economy.

Europe continued to lag behind. The regional index fell to -0.27 from -0.17, indicating greater spare capacity at suppliers and continued caution among companies regarding restocking. Although purchasing activity remained moderate, the pace of decline moderated, suggesting tentative signs of stabilization. In the UK, the index fell to -0.17 from 0.12, pointing to underutilized supply chains and a weakened manufacturing backdrop in early 2026.

“After several months of stagnation, January data points to a broad-based recovery across the U.S. manufacturing sector,” he said. John Piatek, Vice President, Consulting, GEP. “Despite tariffs and trade uncertainty, manufacturers are showing real resilience, supported by a declining cost of capital that is giving procurement teams greater flexibility to adjust sourcing and inventories.”

On the demand front, global purchases of raw materials, raw materials and intermediate goods rose at their fastest pace in almost four years. While Asia was the main driver, American manufacturers also expanded their procurement.

Inventory trends varied by region. Globally, reports of precautionary stockpiling due to price or supply concerns were muted, indicating limited anxiety about inflation or disruptions. However, North America experienced a growing inventory buildup, while European companies continued to liquidate.

Materials shortages remained below their long-term average for the second consecutive year, indicating that supply constraints were less frequent than normal. Labor shortages also did not represent a significant barrier, with reports of delays due to staffing limitations falling short of historical norms.

Meanwhile, rising global oil prices in January contributed to a rise in transportation costs earlier in the year.

The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP and is derived from S&P Global PMI surveys, which cover companies in more than 40 countries.

Fiber2Fashion News Desk (SG)