War Continues to Weigh on Eurozone Manufacturing, While UK and US Sectors Hold Up Better – PMI

The Eurozone manufacturing sector continued to feel the impact of the economic shock stemming from the Iran–US conflict, as weaker demand for goods coincided with the fastest increase in raw material costs in four years, intensifying concerns about inflationary pressures.

Reports released on Monday also highlighted growing worries about disruptions to energy and commodity supplies, particularly in regions directly affected by the conflict.

The Eurozone Manufacturing PMI eased to 51.6 in May from 52.2 in April, while Germany’s Manufacturing PMI fell to 50.1 from 51.4. The picture was further clouded by weak German retail sales data, which declined by 0.3% in May after rising 2.7% in the previous month.

Although manufacturing activity across the region remained above the 50-point threshold that separates expansion from contraction, the latest figures suggest the sector is increasingly struggling under the weight of rising input costs and supply-chain disruptions linked to the Middle East conflict.

In contrast, manufacturing sectors in the UK and the United States demonstrated greater resilience. The UK Manufacturing PMI edged up to 53.9 in May from 53.7 in April, while the US Manufacturing PMI climbed to 54.0, its highest level in four years, from 52.7 in the previous month.

Despite the relatively stronger performance in the UK and US, economists remain concerned about the broader outlook for global manufacturing, particularly if the conflict persists. With both sides still far from reaching a viable peace agreement, and periodic flare-ups continuing to fuel uncertainty, fears of deeper economic fallout and prolonged supply disruptions remain elevated.