Eurozone Manufacturers Boost Inventory Amid Middle East Tensions

Eurozone manufacturers increased raw material inventories in April over fears of supply disruptions and rising costs from Middle East conflicts. Business confidence dipped, yet new orders saw significant growth. The future output expectations index declined, indicating potential economic challenges as input prices and inflation climb, urging possible ECB interest rate hikes.

Eurozone manufacturers accelerated their stockpiling of raw materials in April, driven by apprehensions about supply disruptions and escalating costs linked to tensions in the Middle East, according to a survey released on Monday. Business confidence took a hit, reaching its lowest point since late 2024.

The S&P Global Eurozone Manufacturing PMI was influenced by customers rushing to purchase goods in anticipation of price surges and potential availability issues. New orders surged, marking the fastest growth in four years, with the overall index increasing to 52.2 from 51.6 in March, reflecting an expansion in activity.

The future output expectations index, a measure of economic optimism, fell to its lowest in 17 months. As supply chains faced tightening pressure and input costs soared, inflation climbed, sparking concerns about potential interest rate hikes from the European Central Bank. Meanwhile, delivery times worsened, and employment continued its decline.