Euro zone factory growth strong in Sept but bottlenecks bite

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LONDON, Oct 1 (Businesshala) – Euro zone manufacturing growth remained strong in September, but activity was hit hard by supply chain disruptions, which are likely to remain and inflation pressures high, a survey said on Friday. shown in.

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Factories have struggled with logistical issues, product shortages and a labor crisis, brought on in large part by the ongoing disruptions caused by the coronavirus pandemic, which has forced governments to impose strict restrictions on mobility.

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IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) fell to 58.6 in September from 61.4 in August, and just below the initial “flash” estimate of 58.7.

An index measuring output, which feeds into Tuesday’s overall PMI and is seen as a good guide to economic health, fell from 59.0 in August to 55.6. Anything above 50 indicates growth.

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Chris Williamson, chief business economist at IHS Markit, said: “While euro area manufacturing expanded at a faster pace in September, growth has weakened as producers report a mounting toll from supply chain headwinds.”

“Supply issues continue to wreak havoc across large sectors of European manufacturing, reporting delays and shortages at rates not seen in nearly a quarter century and showing no sign of any imminent recovery.”

Those constraints kept pressure on the cost of raw materials needed to factories. The Input Price Index declined to 86.9 from 87.0 in August.

However, factories passed some of those increases to customers and the production price index reached a record high in the summer.

Inflation in the euro area likely rose to 3.3% last month, preliminary official data expected later on Friday show, well above the European Central Bank’s target of 2.0%. (Businesshala://realtime/action=open/url=cpurl://apps.cp./Apps/econ-polls?RIC=EUHICF%3DECI)

The ECB will cut emergency bond purchases this quarter despite rising inflation, it said last month, taking the first small step towards easing emergency aid that has propelled the bloc’s economy during the coronavirus pandemic.

Reporting by Jonathan Cable; Editing by Susan Fenton

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