Manufacturers Face Rising Costs amid Middle East Conflict

Manufacturing activity weakened across much of the world in July as demand softened and production costs rose amid the five-month war in the Middle East, according to business surveys released on Monday.

The conflict has severely disrupted shipping through the Strait of Hormuz, a vital route for energy exports from the Persian Gulf, driving up energy costs for manufacturers worldwide.

In China, growth in new orders slowed to its weakest pace since January. Meanwhile, the eurozone manufacturing Purchasing Managers' Index (PMI) rose to 51.9, its highest reading since April, although the increase in production was driven largely by firms working through existing orders rather than stronger new demand.

France's manufacturing sector slipped back into contraction, while growth slowed in Italy. In the UK, manufacturing activity expanded for a ninth consecutive month, although the pace of growth eased from June.

Japan stood out, with factory output growing at its fastest pace since February 2014, supported by strong demand for artificial intelligence-related technologies and semiconductors.

(Reuters, bak)