Euro zone factory output growth stalled in April

LONDON (Reuters) – Euro zone manufacturing output progress stalled final month as factories struggled to supply uncooked supplies whereas demand took a knock from steep value will increase and fears concerning the financial outlook, a survey confirmed.

Russia’s invasion of Ukraine, coupled with renewed COVID-19 associated lockdowns in China, have exacerbated provide chain bottlenecks and left factories struggling and ahead trying indicators within the survey didn’t level to an imminent turnaround.

S&P International (NYSE:)’s closing manufacturing Buying Managers’ Index (PMI) fell to a 15-month low of 55.5 in April from March’s 56.5, simply above beneath an preliminary “flash” estimate of 55.3 and nonetheless comfortably above the 50 mark that separates progress from contraction.

However an index measuring output, which feeds right into a composite PMI due on Wednesday and seen as a superb gauge of financial well being, sank to 50.7 from 53.1, its lowest since June 2020, when the bloc was enduring the primary wave of the coronavirus pandemic.

“Manufacturing output got here to a close to standstill throughout the euro zone in April,” mentioned Chris Williamson, chief enterprise economist at S&P International.

“Corporations not solely reported that ongoing issues with element shortages had been aggravated by the Ukraine conflict and new lockdowns in China, however that rising costs and rising uncertainty concerning the financial outlook had been additionally hitting demand.”

Enter prices rose at one on the quickest charges within the survey’s historical past and factories handed that on to prospects by elevating their costs at a document tempo. The output costs index climbed to 77.3 from 74.2, its highest since S&P International began gathering the information in late 2002.

That’s possible so as to add strain on the European Central Financial institution to tighten coverage as inflation within the foreign money union reached 7.5% final month, preliminary official date confirmed final week, virtually 4 instances the Financial institution’s 2% goal.

The ECB is anticipated to lift its deposit price earlier than year-end, a Reuters ballot confirmed final month. [ECILT/EU]