Global Factory Input Costs Soar Worldwide as Iran War Snarls Up Supply Chains

• Factories across the world faced soaring input costs and supply chain disruptions in March 2026 due to the Iran war, as underlying tepid demand threatened to undermine the manufacturing sector's fragile recovery. The conflict has disrupted global logistics networks, causing delivery delays, pushing up input price inflation and distorting headline growth measures.
• Headline Purchasing Managers' Index (PMI) numbers, usually a sign of increased activity, were falsely elevated by the supply shock lengthening delivery times, said Chris Williamson, chief business economist at S&P Global. That was the case for the headline euro zone reading, while in Asia, many economies saw it fall, a sign that surging fuel costs and heightening uncertainty from the Iran war were taking a toll.
• Wednesday's S&P Global euro zone Manufacturing Purchasing Managers' Index (PMI) rose to 51.6 in March from February's 50.8, higher than a preliminary estimate of 51.4. A reading above 50.0 would normally indicate growth in activity. In Britain, outside the European Union, cost pressures soared, and delivery delays due to ships avoiding the Strait of Hormuz were the longest since mid-2022.
• The findings highlight the challenge policymakers face in Asia, a region that buys about 80% of the oil that is shipped through the Strait of Hormuz, making many countries vulnerable to the hit from the energy shock caused by the war. Manufacturing activity slowed across much of Asia, including Indonesia, Vietnam, Taiwan and the Philippines, while Japan also saw a hit from rising costs. South Korea was an outlier with factory activity expanding at the strongest pace in more than four years, led by semiconductor demand and new product launches.

(Source: Reuters)