Eurozone manufacturing sector shows grow in March, data shows

The eurozone manufacturing sector continued to grow in March 2026, according to the latest S&P Global Eurozone Manufacturing PMI, with ‘modest upticks’ in both production and new order inflows.

The headline PMI rose to 51.6, up from 50.8 in February, marking a 45-month high and signalling continued growth in production and new order inflows. The output component also increased to 52.0, its strongest level in seven months.

‘The most notable developments were on the supply-side of the economy,’ S&P Global noted in its report. ‘March survey data signalled the greatest lengthening of input lead times in just over three-and-a-half years as the war in the Middle East disrupted global logistics markets. Eurozone manufacturers raised their purchasing activity for the first time since June 2022, even though input price inflation soared to a 41-month high.’

Manufacturers across the region reported a stabilisation in export demand after eight months of contraction, while backlogs of work grew for the first time in nearly four years.

Country by country

Performance was varied on a country-by-country basis, with Greece recording the highest manufacturing PMI, followed by Ireland, while Spain remained in contraction, posting the sharpest deterioration since April 2025.

Elsewhere, Germany and Italy saw their strongest readings in 46 and 37 months, respectively, and France’s manufacturing sector remained stagnant.

Despite growth in production and new orders, employment in the sector declined in March, reflecting caution among manufacturers amid heightened input costs and geopolitical uncertainty.

Middle East impact

“The war in the Middle East has already left its mark on euro area manufacturing,” commented Joe Hayes, principal economist at S&P Global Market Intelligence. “Suppliers’ delivery times have risen sharply as logistics markets re-adjust to maritime disruption, while surging oil and energy prices have pushed factory input cost inflation up to its highest level since late-2022.

“The frustrating part is that the manufacturing sector had been slowly gaining momentum since the start of 2026, aided by generally muted cost pressures in recent years, which have helped goods producers keep a lid on their charges. However, we saw some of the war-driven inflation impulse being passed straight through to final prices in March, reducing the eurozone’s competitiveness, and this will likely put demand under renewed pressure.

Hayes added that while factory production and order growth rates held steady during March, expansions were more muted.

“It therefore might not take too much to bring output and sales volumes lower, and such a risk clearly rises the longer the war carries on,” he noted. Read more here.