Manufacturing activity strengthened across much of Europe and Asia in September as the global artificial-intelligence investment boom continued driving demand for semiconductors, capital equipment and industrial products despite rising energy and borrowing costs.
The eurozone manufacturing Purchasing Managers’ Index increased to 52.9 from 52.7 in August, reaching its highest level since May 2022. A reading above 50 indicates expansion.
Growth was broad across the currency bloc, with the Netherlands leading the expansion and Germany recording solid growth.
Demand was particularly strong for capital goods associated with artificial intelligence and defense investment, while consumer-goods demand remained weaker amid price pressure.
Asia showed a similar pattern.
South Korean manufacturing expanded at its fastest pace in four months, while export demand grew at its strongest rate in roughly 15½ years.
Taiwan’s manufacturing PMI climbed to 56.7 from 54.7 in August, with new orders and production benefiting from semiconductor demand.
China’s manufacturing sector also returned to expansion in September, data released Wednesday showed.
Japan was the principal exception among major Asian manufacturing economies. Its PMI fell to a six-month low as domestic output and new orders weakened, although export orders continued to rise.
India’s manufacturing sector expanded at its fastest rate in seven months.
The surveys suggest that enormous global investment in AI infrastructure is beginning to influence manufacturing beyond the largest U.S. technology companies.
Semiconductor production, data-center equipment, electrical infrastructure and related capital spending are creating demand across international supply chains.
But that strength comes with a complication.
Higher energy prices and rising interest rates are increasing production and financing costs at the same time that factories expand.
That combination could sustain economic growth while making central banks’ inflation fight more difficult.
Investors will now watch whether AI-driven industrial demand remains strong enough to offset higher financing and energy costs during the fourth quarter.
