Eurozone manufacturing PMI hit a near four-year high in March, supply chain disruptions leading to "false prosperity".

A survey shows that due to disruptions in the supply chain, the manufacturing growth data in the Eurozone has been boosted, with the manufacturing growth rate in March reaching its strongest level in nearly four years. However, at the same time, potential demand remains weak, and rising input costs triggered by the Iran war pose a threat to the fragile recovery of the industry. Conflicts in the Middle East have disrupted the global logistics network, causing delivery delays, to a certain extent pushing up the overall growth indicators, while also raising input prices to the highest level since October 2022. Data shows that the Eurozone's March Standard & Poor's Global Manufacturing Purchasing Managers' Index (PMI) rose from 50.8 in February to 51.6, above the initial value of 51.4. A reading above 50 indicates expansion in industry activity. Joe Hayes, Chief Economist at S&P Global Market Intelligence, said, "The Middle East war has left its mark on Eurozone manufacturing. With the logistics market readjusting to the disruption in sea freight, supplier delivery times have significantly lengthened, while the surge in oil and energy prices has driven factory input cost inflation to the highest level since the end of 2022." As a key indicator of demand, the new orders sub-index remained unchanged from the 46-month high reached in February, but the growth rate remained moderate. Output achieved growth for the third consecutive month, with the output sub-index rising from 51.9 in February to 52.0, reaching a seven-month high. New export orders, after contracting for eight consecutive months, stabilized, bringing some relief to manufacturers. The backlogs of work increased for the first time since mid-2022, indicating pressure on production capacity, but companies accelerated their pace of layoffs in March. Driven by the rise in oil and energy prices, input cost inflation spiked to a 41-month high. In response, manufacturers raised selling prices at the fastest rate in over three years. Hayes added, "We see that in March, some inflation pressure driven by the war directly transmitted to final prices, weakening the competitiveness of the Eurozone." Impacted by the conflict, business confidence fell to a five-month low and remains below the long-term average. Looking at the countries individually, Germany and Italy saw PMI readings reach 46- and 37-month highs respectively, with Spain being the only country in contraction. Greece had the highest PMI reading, followed closely by Ireland, while the French manufacturing industry remained stagnant.