Fashion
Eurozone manufacturing hits 45 month high in March amid cost surge
The S&P Global Eurozone Manufacturing PMI rose to 51.6 in March from 50.8 in February, marking a 45-month high and signalling continued expansion. The Output Index also edged up to 52.0, its strongest level in seven months, supported by modest gains in production and new orders.
Eurozone manufacturing expanded in March 2026, with PMI rising to 51.6, a 45-month high, supported by modest gains in output and orders.
Export demand stabilised and backlogs increased.
However, Middle East conflict-driven disruptions lengthened delivery times and pushed input cost inflation to a 41-month high.
Firms raised prices, employment declined, and business confidence weakened.
A key positive development was the stabilisation of export demand after eight months of contraction, while backlogs of work increased for the first time in nearly four years, indicating emerging capacity pressures. Purchasing activity also expanded for the first time since June 2022, reflecting improved business activity, S&P Global said in a press release.
However, supply-side disruptions dominated the outlook. Suppliers’ delivery times lengthened to the greatest extent in over three-and-a-half years, largely due to logistics disruptions stemming from the ongoing Middle East war. At the same time, input cost inflation surged to a 41-month high, driven by rising energy and raw material prices.
The impact of these pressures was visible across the region. Greece and Ireland led growth, while Spain remained in contraction. Germany and Italy recorded their strongest readings in 46 and 37 months, respectively, while France’s manufacturing sector stagnated.
Despite rising backlogs, employment declined at a faster pace, suggesting firms remain cautious amid uncertainty. Inventories of both inputs and finished goods were reduced more sharply, reflecting tighter supply conditions.
Manufacturers passed on higher costs to customers, with output price inflation accelerating to a more than three-year high. Meanwhile, business confidence weakened to a five-month low, falling below the long-term average as geopolitical risks cloud the outlook.
Joe Hayes, principal economist at S&P Global Market Intelligence, said the Middle East conflict has already disrupted logistics and pushed input costs sharply higher. He noted that while the sector had been gradually recovering in early 2026, rising inflation and reduced competitiveness could dampen demand if disruptions persist.
Overall, while eurozone manufacturing remains in expansion territory, the balance between recovery and renewed pressure appears increasingly fragile amid escalating geopolitical and cost challenges.
Fibre2Fashion News Desk (SG)