Global manufacturing demand hits four-year high in January

Purchasing volumes rose across many major economies, driving the strongest increase in global demand for commodities, raw materials and components since May 2022, S&P Global said in a press release.

Asia led the upturn, with manufacturers in China, Japan, South Korea and India stepping up 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 busiest since November 2024. ASEAN markets also contributed to the expansion, underscoring broad-based regional strength.

North America regained momentum after a softer fourth quarter in 2025. The regional index climbed to 0.06 from -0.37, signalling that supplier capacity was the most stretched in over 18 months. US manufacturers increased procurement activity and showed a greater appetite for inventory building, reflecting confidence in order pipelines and resilience in the industrial economy.

Europe remained the laggard. The regional index fell to -0.27 from -0.17, indicating greater spare capacity at suppliers and continued caution among firms regarding restocking. Although purchasing activity remained subdued, the pace of decline moderated, suggesting tentative signs of stabilisation. In the UK, the index dropped to -0.17 from 0.12, pointing to underutilised supply chains and a weakening manufacturing backdrop at the start of 2026.

“After several months of treading water, January’s data points to a broad-based recovery across US manufacturing, spanning sectors,” 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’s giving procurement teams greater flexibility to adjust sourcing and inventories.”

On the demand front, global buying of commodities, raw materials and intermediate goods rose at its fastest pace in almost four years. While Asia was the principal driver, US manufacturers also expanded procurement.

Inventory trends varied by region. Globally, reports of precautionary stockpiling due to price or supply concerns were muted, indicating limited anxiety over inflation or disruptions. However, North America saw rising inventory accumulation, whereas European firms continued to destock.

Material shortages remained below their long-run average for the second consecutive year, signalling that supply constraints were less frequent than normal. Labour shortages also did not pose a significant barrier, with reports of backlogs due to staffing constraints below historical norms.

Meanwhile, higher global oil prices in January contributed to a rise in transportation costs at the start of the year.

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

Fibre2Fashion News Desk (SG)