June manufacturing surveys showed factory activity remained in expansion across several major economies, while firms continued to report higher energy-related costs, shortages and shipping delays linked to the Middle East conflict.
The euro zone manufacturing PMI was 51.4 in June, compared with 51.6 in May, marking a fifth straight month above 50. Germany’s reading was 50.3, the UK final PMI was 52.5, Japan’s manufacturing PMI was 54.8, South Korea’s PMI slowed to 52.1 from 54.8, and China’s manufacturing PMI was reported at 51.7.
Survey details indicated that delivery times remained under pressure and companies continued to use inventories or build precautionary stocks to manage supply disruptions and expected price increases, although some measures of input-cost and output-price inflation eased from earlier peaks. In Japan, new orders rose at the fastest pace in more than two years and input-cost inflation was near a four-year high, while in South Korea output and new orders grew more slowly and export orders fell again.
Several reports said lower oil prices and a partial reopening of the Strait of Hormuz helped reduce some cost pressure, but S&P Global said most June responses were collected before the June 17 U.S.-Iran ceasefire memorandum, limiting the surveys’ coverage of post-ceasefire supply and energy conditions. In the euro area, inflation was reported at 2.8%, still above the European Central Bank’s 2% target, after the ECB raised interest rates by 25 basis points on June 11 and said higher energy prices from the conflict were adding to inflation pressures.