Eurozone factory output posted its best quarterly performance since the start of 2022 last month, while Asian manufacturers were lifted by an AI boom, according to business surveys on Wednesday that provide some respite from the U.S.-Israeli war with Iran.
Cost pressures did dip, but they remain elevated as supply shortages and shipping delays lengthened lead times, suggesting the energy shock tied to the Middle East conflict could intensify.
S&P Global noted that most survey responses were collected before the signing of a memorandum of understanding for a ceasefire between the U.S. and Iran on June 17, meaning the full impact on supply chains and energy costs is not yet captured in the PMI data.
Inflation in the common currency area was less than expected last month, coming in at 2.8%, but still well above the European Central Bank's (ECB) 2.0% target, official data showed.
"The inflation rate in the eurozone fell noticeably in June," said Ralph Solveen at Commerzbank. "A key reason is that oil prices fell significantly over the past month due to the partial reopening of the Strait of Hormuz."
