European industrial sectors show cautious optimism amid Iran war uncertainty

German machinery and plant engineering firms reported a modest lift in confidence for the second quarter of 2026. The VDMA survey showed the business outlook turning slightly positive, with about 28 % of companies rating the current situation as good or very good and a small positive net balance after a weak start to the year. However, the outlook remains cautious, as only a quarter expect an improvement in the next six months and revenue growth expectations have barely changed. The sector also highlighted supply‑chain pressures caused by the closing of the Strait of Hormuz due to the Iran conflict, noting notable shortages of metals, plastics, and especially electronic components.

In Switzerland, manufacturers of household appliances expressed a more upbeat view for the third quarter of 2026. A survey by the Swiss appliance association indicated that 27 % anticipate higher earnings, 41 % expect a rise in order books and 32 % foresee increased order intake. Respondents linked the brighter outlook to the hoped‑for de‑escalation of the Iran war and the possible reopening of the Hormuz Strait, while still flagging concerns over rising material costs driven by a shortage of semiconductor chips.