Eurozone factory activity expanded for the first time since mid-2022, signaling a fragile but notable recovery. Strong domestic demand helped offset the drag from higher U.S. tariffs, offering a glimmer of relief for Europe’s manufacturers.
The bloc’s manufacturing index climbed to 50.7 in August from 49.8 in July, crossing the threshold that separates growth from contraction. Greece and Spain led the rebound, while Germany’s factories remained just under growth levels but improved to their highest reading in over three years. Economists noted that rising domestic orders are cushioning the weakness in exports, highlighting the region’s resilience in the face of global trade tensions.
In contrast, Asia’s major export-driven economies remained under pressure. Japan’s and South Korea’s manufacturing sectors both contracted in August, marking continued strain from U.S. tariffs and stiff competition from Chinese exports. Taiwan also reported shrinking activity, reflecting the broader slowdown across the region. Analysts warned that countries heavily reliant on U.S.-bound shipments, including South Korea and Thailand, remain particularly vulnerable to escalating trade barriers.
China offered mixed signals, with one private survey showing a modest expansion while official data still pointed to contraction. India, however, stood out as a regional bright spot, with manufacturing expanding at its fastest pace in more than 17 years, underpinned by strong economic growth.