Global supply chains steady in September; Asia nears full capacity

China led a strong rebound in factory purchasing, driving Asia’s supply chains to near-full utilisation. Manufacturing procurement activity in the region rose at the fastest pace since mid-2022. The uplift was particularly pronounced in Chinese factories, where businesses expanded input purchasing to meet stronger order volumes and facilitate growth in production and sales, GEP said in a press release.

Across Asia, input demand strengthened for the tenth consecutive month, showing resilience amid a broader global slowdown. This surge offset weaknesses in other regions and became the primary driver of the overall global improvement.

In contrast, North American supply chains lost momentum during the month. Manufacturers cited tariff-related delays, economic uncertainty, and cautious purchasing strategies as key reasons for the slowdown. After a strong August, most firms chose not to build up additional inventories, reflecting concerns over the near-term outlook.

While demand remained relatively stable, delivery times were affected by customs and tariff issues, which, coupled with reduced purchasing, led to underutilisation of supply chain capacity across the region.

Europe’s supply chains continued to operate well below potential, extending the region’s industrial downturn. Manufacturers in Germany, France, and Italy reduced both purchasing and inventory levels, pushing the region’s activity to its weakest since March 2025. The region’s subdued factory output and diminished orders were indicative of persistent energy costs, low external demand, and weaker consumer confidence.

The UK’s index rose modestly to -0.57 from -0.9, suggesting marginal improvement in utilisation levels. Yet, the figure continues to reflect significant manufacturing weakness, with subdued output, low new orders, and ongoing pressure from inflation and high borrowing costs affecting business sentiment.

Global factory purchasing saw its strongest increase since June 2022, primarily led by Asia and particularly China. This indicates renewed optimism in the region’s manufacturing prospects. Demand in North America and Europe, however, remained subdued as manufacturers adopted cautious procurement strategies, added the release.

Stockpiling frequency declined globally, showing that manufacturers are less concerned about price inflation or shortages. This suggests that fears of supply instability have eased, and procurement managers are confident about material availability.

Labour shortages decreased further in September, signalling robust availability of commodities, components, and intermediates. Factories reported little to no difficulty in sourcing required materials, marking one of the most stable supply conditions in recent months.

Staffing capacity remained sufficient, with labour-related backlogs dropping to their lowest level in six months. This improvement points to stabilised workforce availability and reduced pressure on production capacity.

Global transportation costs aligned with historically normal levels, reflecting steady freight market conditions and reduced logistics bottlenecks.

“This is the new normal for global companies—higher prices, tariff pressure, and slower growth are here to stay,” said John Piatek, vice president at consulting, GEP. “For supply chain leaders who've been waiting to see how things settle: this is as stable as it's going to get—it's time to start executing their revised strategies.”

ALCHEMPro News Desk (SG)