Eurozone manufacturing activity growth records eight-month low

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Eurozone manufacturing activity expanded at its slowest pace in eight months in October, as supply chain issues interrupted production schedules and dampened orders, final survey results from IHS Markit showed on Tuesday.

The manufacturing purchasing managers’ index (PMI) fell to 58.3 in October, from 58.6 in September. The reading was also below the ‘flash’ 58.5.
The indicator signalled the slowest improvement in manufacturing sector conditions since February. Average lead times on input deliveries lengthened drastically. Further, companies lowered their production, citing difficulties in acquiring inputs.

Although both production and new orders expanded in October, the pace of expansion weakened from September. Subsequently, inflationary pressures intensified across the euro area, with input costs and output prices both rising at new survey-record rates in October.

Elsewhere, backlogs of work continued to rise in October, once again reflecting the ill effects of supply-chain disruption.

Business confidence remained strong and above its historical average in October and the level of positive sentiment slumped to a one-year low.

Among the big four economies, the German and French indexes slumped to nine-month lows in October. Spain’s manufacturing activity growth was the slowest in seven months, while Italy registered robust growth.

Material shortages and supply bottleneck restrained Germany’s manufacturing output and new orders. The BME manufacturing PMI came in at 57.8 in October, down from 58.4 in September and the flash score of 58.2.

France’s manufacturing output declined for the first time since January as severe supplier delivery delays left many firms with insufficient quantities of inputs. The manufacturing PMI decreased to 53.6 in October from 55.0 in September. The flash reading was 53.5.

Elsewhere, Italy logged its third-highest growth on record in October. The manufacturing PMI rose to 61.1 in October from 59.7 in September. Economists had forecast the index to remain unchanged at 59.7.

In Spain, supply-side challenges and rising inflation served to limit growth in October. The factory PMI posted 57.4, down from 58.1 in September and its lowest level since March.

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