Euro Area Manufacturing Growth Slows to 3-Month Low

The S&P Global Eurozone Manufacturing PMI edged down to 52.4 in October 2026, its lowest level in three months, from 52.9 in September and below market expectations of 52.7. Manufacturing employment declined slightly following two consecutive months of growth. However, input purchasing continued to expand, with the pace accelerating to its joint-fastest in nearly four-and-a-half years, matching the rate recorded in April amid precautionary stockpiling linked to the ongoing conflict in the Middle East. As a result, manufacturers’ stocks of purchases increased for the first time in almost four years. Meanwhile, supplier lead times lengthened significantly, marking the sharpest deterioration in four months. On the price front, input costs rose sharply in October, driven by higher energy, fuel, and transportation costs. The increase was the steepest since May and exceeded the year-to-date average.

The S&P Global Eurozone Manufacturing PMI rose to 52.9 in September 2026, the most since May 2022 and above preliminary estimates of 52.7. Demand improved notably, with new orders increasing at their fastest pace since March 2022, while export sales expanded for a second consecutive month, marking the first sustained rise in overseas orders in more than four and a half years. Rising demand also put pressure on factory capacity, with backlogs increasing for the first time since April and at the fastest pace in almost four and a half years. Employment edged higher, reversing a prolonged period of job losses, while manufacturers increased purchases of raw materials and intermediate goods at one of their fastest rates since May 2022. Supply delays persisted but eased to their least severe since February. Meanwhile, business confidence reached a seven-month high, although input and output price pressures accelerated.

The S&P Global Eurozone Manufacturing PMI remained unchanged at 52.7 in September 2026, slightly exceeding the market expectation of 52.6, according to flash data. Manufacturing output also remained strong, with the Output Index rising to 53.4 from 53.3, its highest level in 55 months. Growth was supported by a renewed increase in new export orders, while employment was broadly unchanged. Firms also increased purchasing activity for a second consecutive month, although the pace remained modest. The rise in input buying helped companies maintain pre-production inventories broadly unchanged, ending a decline that had persisted since February 2023, while stocks of finished goods were also stable. Supplier delivery times lengthened again, although the deterioration was the least severe since February. Meanwhile, input cost inflation accelerated and output prices rose at a faster pace. Business confidence weakened, with manufacturers expressing less optimism about the year ahead.