LONDON – Eurozone manufacturing growth was strong in September but supply chain disruptions hit activity hard which is likely to continue and keep inflationary pressures, a survey showed on Friday.
Factories have struggled with logistical problems, product shortages and labor crises, largely due to ongoing disruptions caused by the coronavirus epidemic that have forced the government to impose stricter restrictions on mobility.
The IHS Market Final Product Purchasing Management Index (PMI) fell to 61.6 from 61.4 in August and just below the initial 58.7 “flash” estimate.
An indicator measurement output, which feeds into a composite PMI on Tuesday and is seen as a good guide for economic health, fell to 59.6 from 55.0 in August. Anything above 50 indicates an increase.
“Eurozone production expanded at a strong pace in September, but growth weakened significantly,” said Chris Williamson, chief business economist at IHS Markets.
“Supply problems continue to wreak havoc on a large part of European production, with delays and shortages for almost a quarter of a century and no signs of impending improvement.”
Those barriers put pressure on the cost of raw materials needed by factories. The input price index only declined from 87.0 to 86.9 in August.
However, factories gave some of these increases to consumers and the output price index reached record highs seen in the summer.
Inflation in the eurozone rose to 3.3 percent last month, with preliminary official data expected later Friday, exceeding the European Central Bank’s target of 2.0.0 percent.
Despite rising inflation, the ECB will cut emergency bond purchases this quarter, it said last month, taking the first small steps to open emergency aid that stimulated the bloc’s economy during the coronavirus epidemic.
This News Originally From – The Epoch Times