Eurozone and UK economic growth slowed significantly in March, largely attributed to the escalating conflict in the Middle East. Preliminary data reveals a near-stall in Eurozone growth, with the S&P Global Composite PMI falling to 50.5, a 10-month low, driven by a decline in new orders, particularly in the services sector. Input costs surged at the fastest pace since February 2023, fueled by energy price hikes and supply chain disruptions. Similar trends were observed in the UK, with growth hitting a six-month low, and Japan, where private sector expansion slowed. German firms were already expressing pessimism about foreign business due to rising trade barriers *before* the recent escalation, with the US market posing increasing risks. The conflict is exacerbating existing challenges, increasing shipping costs and impacting international trade. Employment figures are also weakening, with job cuts concentrated in manufacturing. While manufacturing output showed some resilience in certain areas like Germany and Japan (supported by sectors like AI and defense), overall business confidence has plummeted, raising concerns about stagflation.
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