Financial News: Eurozone Manufacturing Sector Expands Most Since Mid-2022

Eurozone Manufacturing Sector Expands Most Since Mid-2022

(RTTNews) - The euro area manufacturing sector expanded at the fastest pace since mid-2022 in March, driven by increases in both production and new orders but the war in the Middle East disrupted global logistics and intensified price pressures.

The final manufacturing Purchasing Managers' Index climbed to a 45-month high of 51.6 in March from 50.8 in February and remained moderately above the flash estimate of 51.4.

"The war in the Middle East has already left its mark on euro area manufacturing," S&P Global Market Intelligence Principal Economist Joe Hayes said. Factory output increased at the fastest pace in seven months underpinned by a sustained increase in new orders. New export orders were virtually unchanged from France.

There was an increase in their backlogs of work, signalling capacity pressures for the first time since mid-2022. Nonetheless, employment declined at a faster pace.

Purchasing volumes were lifted marginally, ending a prolonged period of cutbacks that began in July 2022. Manufacturers reported an intensification of supply-chain pressures with delivery times lengthening to the greatest extent in just over three-and-a-half years. Regarding price pressures, the survey showed that input price inflation accelerated sharply to hit the highest since October 2022. Output charges were subsequently raised more aggressively, to hit the fastest in more than three years.

Finally, business confidence declined to a five-month low amid the war in the Middle East.

Spain was the only country to post in contraction territory, recording the sharpest deterioration since April 2025. France's manufacturing sector stagnated, whereas Germany and Italy registered their strongest readings in 46 and 37 months, respectively.

Germany's manufacturing sector grew the most since May 2022, underpinned by output and new orders in March. The main driver of the rise in the index was suppliers' delivery times index. However, cost pressures intensified amid the war. The final manufacturing PMI posted 52.2 compared to 50.9 in the previous month and the flash score of 51.7.

The French manufacturing sector stagnated in March after production declined following back-to-back months of growth and new orders declined sharply as clients postponed or cancelled their orders citing uncertainty from the Iran war. The final factory PMI edged down to 50.0 from 50.1 in February. The flash score was 50.2.

Italy's manufacturing growth improved in March despite high uncertainty and rising cost pressures. The factory PMI rose to 51.3 from 50.6 in February.

On the other hand, Spain's manufacturing activity returned to the contraction zone in March amid notable geopolitical uncertainty, supply-chain disruption and rising energy prices. The manufacturing PMI fell to 48.7 in March from 50.0 in February.

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