LONDON — The global manufacturing sector continued to recover unevenly through mid-2026, with stronger output in North America and parts of East Asia contrasting with weaker activity across several energy-importing and export-dependent economies, according to recent business surveys and international economic forecasts.
Factory output worldwide expanded during the second quarter at its fastest pace since 2021, supported by resilient demand in technology-related industries and easing supply disruptions following a de-escalation of conflict in the Middle East. However, manufacturers reported weakening business confidence, softer hiring and persistent uncertainty over the outlook, according to S&P Global's June manufacturing purchasing managers' surveys.
Regional performance varied considerably.
North America recorded some of the strongest gains, with U.S. manufacturing expanding for a sixth consecutive month in June. The Institute for Supply Management said new orders and production continued to grow, although export demand remained subdued and employment contracted modestly. Input cost pressures also eased compared with earlier in the year.
The euro zone also posted continued manufacturing growth, completing its strongest quarter since early 2022. S&P Global's survey showed output and new orders improving despite lingering export weakness, while lower oil prices helped moderate inflationary pressures after earlier disruptions linked to Middle East tensions.
Elsewhere, momentum remained mixed. Manufacturing activity strengthened in Japan, South Korea, Taiwan and, to a lesser extent, China, while growth slowed sharply across parts of Southeast Asia, highlighting widening differences in regional industrial performance, S&P Global said.
The International Monetary Fund said the uneven manufacturing picture reflected broader economic forces shaping the global economy. In its July World Economic Outlook update, the IMF projected global growth of 3.0% in 2026, citing opposing effects from geopolitical tensions, higher energy costs and accelerating investment linked to artificial intelligence and advanced technologies. Economies integrated into technology supply chains generally outperformed, while many energy-importing countries and lower-income economies faced greater pressure from higher costs and weaker demand.
Economists said manufacturing surveys suggest production has remained resilient but warned that businesses remain cautious about the second half of the year. S&P Global reported that employment growth weakened and future output expectations softened despite improving production, indicating companies remain wary of geopolitical risks, trade fragmentation and volatile energy markets.
The next round of manufacturing purchasing managers' surveys and industrial production data, due in the coming weeks, is expected to provide a clearer indication of whether the recovery is broadening or remains concentrated in a limited number of regions and industries.
