Manufacturing activity across parts of Europe and Asia strengthened in September, with growing demand for artificial intelligence-related products helping factories maintain momentum despite higher energy costs and persistent inflationary pressure.
Survey data released Thursday showed that manufacturers in several major economies benefited from increased orders, particularly for technology and other capital goods linked to the AI investment cycle. The improvement comes as the energy price shock associated with the Iran war continues to add pressure to production costs.
In the eurozone, S&P Global’s manufacturing Purchasing Managers’ Index rose to 52.9 in September from 52.7 in August. The reading was the highest since May 2022 and remained above the 50-point threshold that separates expansion from contraction.
Manufacturing growth was reported across the bloc, with the Netherlands recording the strongest expansion. Germany also posted solid growth, while France, Italy and Spain registered more moderate increases.
Iain Simmons, an economist at Oxford Economics, said the survey results indicate stronger industrial conditions than some recent economic data suggest. He noted that demand was particularly strong for capital goods, including AI and defence equipment, while consumer goods faced weaker demand as prices increased.
Simmons also cautioned that rising production costs and expectations for higher selling prices could limit the sector’s performance, suggesting that industrial growth may remain uneven.
Asian manufacturers also benefited from the AI-driven demand cycle. Factory activity improved in Japan, South Korea and Taiwan, all major exporters with important roles in global technology supply chains.
South Korea recorded its strongest manufacturing expansion in four months in September, supported by export demand that grew at its fastest pace in roughly 15 and a half years. S&P Global economist Usamah Bhatti said growth in new orders and production reached their highest levels in about five and a half years, with semiconductor and automotive demand contributing to the improvement.
Taiwan’s manufacturing PMI climbed to 56.7 from 54.7 in August, marking another strong month for one of the world’s key technology and semiconductor hubs.
The figures suggest that AI-related investment is providing an important source of industrial demand even as manufacturers contend with elevated costs and tighter financial conditions.
