The Industrial Brief · No. 41

Europe's factories had their best month since 2022, on orders for machines and defence kit

The euro-area PMI reached 52.9 in September. The cuts this week came in cars and engine parts, and the costs that moved were energy, steel paperwork and a grid date at Port Talbot.

Week of 5 October 2026 · 8 min read

1. 01 · Production

   Euro-area factories grew at the fastest rate since May 2022

   The final S&P Global eurozone manufacturing PMI came in at 52.9 for September, up from 52.7 in August and above the flash reading. It is the highest since May 2022. Output rose to 53.6, a 55-month high, and new orders grew at the fastest rate since early 2022, with exports at a four-and-a-half-year high. Chris Williamson, S&P Global's chief business economist, said output of capital goods was growing at a pace not seen since the post-Covid rebound, driven by AI and defence equipment, while consumer goods demand kept falling. Germany eased to 53.9 from 54.3. Italy, at 50.4, and Spain, at 51.0, moved back into growth. Input and output prices both rose faster. Eurostat's flash estimate on Friday put euro-area inflation at 3.8%, with energy up 18.8% on the year.

   Britain grew more slowly. The UK PMI rose to 51.9 from 51.7, its eleventh month of growth, but the output index fell to 51.5 from 52.1. Input cost inflation picked up for the first time in four months, and supplier delivery times lengthened at the fastest rate since June. In the United States, the ISM index was little changed at 54.5 while its prices index jumped to 77.9, as we reported on Friday.

   A European supplier of machinery or defence parts is quoting into rising demand. A consumer-goods supplier is quoting into rising costs without it.

2. 02 · Production

   BMW's new battery plant started on two shifts

   BMW opened its Irlbach-Straßkirchen plant in Lower Bavaria on Thursday 1 October and began series production of sixth-generation high-voltage batteries for the new i3 built in Munich. The company said the ramp-up had moved faster than planned because of demand for its Neue Klasse cars, so the plant started straight onto two shifts. Building began in April 2024 and the first pre-series battery came off the line in March 2026. At full operation the site will employ about 1,600 people on two lines, with about 500 robots, making several hundred packs a day. BMW put the investment at about €1 billion. BMW says its other German car plants will follow; heise named them as Dingolfing, Regensburg and Leipzig. It is one of five Gen6 pack sites, alongside Debrecen, Shenyang, Woodruff in South Carolina and San Luis Potosí. In a 2023 referendum, more than 75% of Straßkirchen voters backed the plant.

   Under two years from first spade to first pre-series pack, with the local vote won in advance. A German site can still keep that kind of timetable when the car is selling.

3. 03 · Energy

   Port Talbot's electric furnace now waits on the grid until late 2028 at the earliest

   Sky News reported on Thursday 1 October that the government is paying EY about £1 million, according to tender documents cited by Bidfinder, to assess Tata Steel UK's request for more public money for the Port Talbot electric arc furnace. Tata now expects the furnace to start in late 2028 or early 2029. According to Sky, when the £500 million grant was agreed in 2023, the £1.25 billion project was meant to be running by early 2028. Sky, citing industry sources, said the request was likely to run to hundreds of millions of pounds; the exact sum has not been disclosed. The cause is the power supply. Stephen Kinnock, the Welsh Secretary, said at the Labour conference on 29 September that "the challenge we have with the electric arc furnace is the grid connection." National Grid said in June that the work covers two new substations, transformers and 2km of underground cable, and that ground conditions and planning and environmental issues had slowed it. Port Talbot has made no steel of its own since its last blast furnace closed in 2024, and 2,500 of the 5,000 jobs the plan was meant to protect have already gone, according to Sky.

   Buyers of Port Talbot strip face at least two more years without liquid steel from the site. The date that decides it belongs to National Grid, which neither Tata nor the government controls.

4. 04 · Supply chain

   Steel imports into the EU now have to show where the steel was melted

   From Thursday 1 October, importers bringing steel covered by the EU Steel Regulation into the bloc must declare the country where it was melted and poured. The Commission set the evidence rules in Implementing Regulation (EU) 2026/1963, dated 28 August and published on 31 August. The standard proof is a mill test certificate that shows the melt country and the heat number. Invoices, supplier declarations, production records and similar papers can stand in on their own until 30 September 2027, but only as backing for a certificate after that. The melt country is where the steel was first cast, which is not necessarily where it was rolled or coated. This sits on top of the regime that started on 1 July: 18.3 million tonnes of duty-free quota a year and a 50% duty above it.

   Britain's steel rules moved in the same week. The transitional exemption for steel contracted before 14 March, which kept those goods clear of the 50% out-of-quota duty, ran out on 30 September. On 1 October the government also took two non-alloy wire codes out of the measure, cutting their tariff to zero.

   Coil rolled in one country from slab melted in another now has to prove the melt country at the border. Importers whose certificates lack a heat number have twelve months before the other paperwork stops counting on its own.

5. 05 · Talent

   Volkswagen has given notice on its German pay agreements

   Volkswagen AG invoked the reopener clause in the job-security deal it signed with IG Metall at the end of 2024, and gave notice to end several in-house collective agreements from 31 December 2026. The company cited Chinese competition, trade barriers and a sharp change in market conditions over 18 months. Volkswagen did not say how many; union representatives, cited by electrive, put the number at ten, including the framework agreement on hours and overtime. The job guarantee to the end of 2030 is excluded, and under German law the old terms stay in force for now. Volkswagen rejected IG Metall's demand for a 5% pay rise. Talks resume in the second half of October, and the peace obligation ends on 1 January.

   Bosch said on 28 September it will cut 900 of the 1,800 jobs at its Nuremberg plant by 2029, on top of the 22,000 already planned across the group. Nuremberg mainly makes parts for combustion engines and fuel cells. In No. 40 we reported that Mercedes had threatened to shut one German assembly plant and one powertrain plant without naming either.

   Industrial action at Volkswagen becomes possible from January. Nuremberg shows the parts of German industry the PMI recovery is not reaching.

6. 06 · Production

   GM is building about a quarter of the Bolts it planned, union says

   The plant near Kansas City that builds the Chevrolet Bolt is on pace for about 35,000 cars before production ends in the first quarter of 2027, against about 150,000 originally planned. That is the estimate of Dontay Wilson, president of the local United Auto Workers branch, who told Reuters on 28 September that he had worked it out from daily output. GM declined to comment on volumes. It has sold 4,224 Bolts this year to the end of August. Nearly 1,000 workers are on indefinite layoff, Wilson said, and a GM memo seen by Reuters said the second shift's recall had been delayed. The plant will get the petrol Chevrolet Equinox, moved from Mexico, from next year, and the Buick Envision, moved from China. US electric car sales fell after the $7,500 tax credit ended in September 2025, and GM has taken $10.9 billion of EV-related charges since the second quarter of 2025.

   A US electric programme sized on a federal credit has lost about three-quarters of its planned volume, by the union's count, since the credit went. The plant is being refilled with petrol SUVs brought home from Mexico and China.

Sources: S&P Global Eurozone Manufacturing PMI via Reuters (RTÉ) and Sharecast, 1 October 2026; Eurostat flash inflation estimate, 2 October 2026; S&P Global UK Manufacturing PMI via The Manufacturer and Industrial News, 2 October 2026; The Industrial Brief, 2 October 2026; BMW Group, 1 October 2026; heise, 1 October 2026; electrive, 1 and 2 October 2026; Sky News via kmfm, 1 October 2026; Nation.Cymru, 2 October 2026; BBC News, 7 June and 29 September 2026; European Commission, 31 August 2026; Commission Implementing Regulation (EU) 2026/1963, 28 August 2026; CO2iq, 1 October 2026; GOV.UK, updated 1 October 2026; Just Auto, 2 October 2026; Produktion with dpa, 28 September 2026; Reuters, 29 September 2026; La Stampa, 22 September 2026.