Iran War Supply Shocks Push Eurozone Factory Growth to Near Stall; Asian PMIs Jump on Stockpiling

The conflict with Iran is inflicting a supply shock on global manufacturing, driving European factory growth to a near-halt in May while Asian counterparts stockpiled to buffer disruptions. The S&P Global Eurozone Manufacturing PMI fell to 51.6 from April’s 52.2, as rising raw material costs and supply snarls hit demand. Germany stalled and France contracted for the first time since November. The war, which began in late February, has choked trade routes like the Strait of Hormuz, triggering the steepest input cost surge in four years. The European Central Bank is set to hike rates this month and again later in 2026 to contain energy-driven inflation, expected to have risen further above 2% in May data due June 2. Asian manufacturers expanded swiftly. China’s Caixin PMI eased to 51.8 but remained in growth territory, while South Korea’s surged to 54.8—a five-year high—and Vietnam, Taiwan, and the Philippines all accelerated. Firms ramped up orders to secure supplies against potential further shocks, even as input prices jumped sharply.