Global manufacturing activity remained relatively solid in October, but factories are beginning to show strain from rising energy costs while supply-chain disruptions squeezed margins, surveys showed on Monday.
The data point to growing pain for export-led economies as prolonged conflict in the Middle East keeps fuel and food prices high, hitting consumption and business confidence.
S&P Global's Eurozone Manufacturing Purchasing Managers' Index (PMI) eased to 52.7 last month from 52.9 in September – which was the highest reading since May 2022 – but was above a preliminary estimate of 52.4.
Readings above 50.0 indicate growth in activity.
This suggests manufacturers are holding up despite tariffs, conflicts and surging energy costs, but rising input prices add to pressure on the European Central Bank (ECB) to raise interest rates again.
"October’s final manufacturing PMIs confirmed the resilience of the eurozone's industrial sector," said Leo Barincou at Oxford Economics.
"Meanwhile, price pressures continue to intensify as robust demand meets constrained supply, with euro zone input prices rising at their fastest pace since May and output prices also increasing rapidly, reinforcing our view that inflationary pressures will remain elevated over the coming months."
Preliminary data on Wednesday is expected to show inflation in the currency union nudged up to 4.0% in October, according to a Reuters poll, keeping pressure on the European Central Bank to raise interest rates.
The ECB left rates on hold last week as expected, but economists polled by Reuters last month said it would hike again in December.
Germany's manufacturing industry expanded solidly in October, but France's slipped back into contraction.
British manufacturers started the final quarter of 2026 with the strongest output growth in more than two years, although fast-rising costs may worry the Bank of England (BoE), which looks set to raise interest rates this week.
Factory activity across Asia continued to expand in October, but growth slowed in China, Japan, South Korea and Taiwan, surveys showed, indicating the drag from the U.S.-Israeli war with Iran may be offsetting robust global demand for chips and AI-related goods.
"Strong chip and AI demand had masked soft spots in Asian and global economies. But that's becoming hard to sustain with the Middle East war dragging on for so long, pushing up fuel and food prices," said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute in Tokyo.
"High inflation is hurting Asian consumption. Intensifying price competition from China is also weighing on rival exporters like Japan and South Korea," he said.
The RatingDog China General Manufacturing PMI, compiled by S&P Global, stood at 52.0 in October, just below September's 52.1.
Japan's PMI eased, marking the slowest expansion in seven months as output and new orders lost momentum, while South Korean factory activity grew at the slowest pace in eight months on weaker output and demand. Taiwan's PMI continued to show solid growth in activity, albeit slowing down from the previous month.
India's manufacturing growth slowed as domestic demand and hiring weakened, although a surge in export orders helped cushion the blow.
The International Monetary Fund (IMF) has projected that Asia's economic growth will moderate next year, and it warned of heightening risks from the Iran war-induced energy shock and a potential correction in the AI boom.
