The development of production output in the eurozone slowed last month as factories struggled to source raw materials while demand took a boost due to steep cost increases and fears over the financial point of view, showed insight. Russia’s invasion of Ukraine, coupled with the reinstatement of COVID-19-related lockdowns in China, has exacerbated production line bottlenecks and left factories struggling and prospective markers under scrutiny did not show an imminent reversal. S&P Global’s latest manufacturing Purchasing Managers’ Index (PMI) fell to a 15-month low of 55.5 in April from 56.5 in March, only above below an initial “flash” gauge of 55, 3 despite everything easily above the 50 mark which isolates the development of the contraction.
“Manufacturing output virtually came to a standstill in the euro zone in April,” said Chris Williamson, chief economist at S&P Global.
But an index measuring production, which feeds into a composite PMI expected on Wednesday and considered a good indicator of economic health, fell to 50.7 from 53.1, its lowest since June 2020, when the bloc suffered the first wave. of the coronavirus pandemic.
“Companies not only reported that ongoing component shortage issues had been compounded by the war in Ukraine and new lockdowns in China, but that rising prices and growing uncertainty about the economic outlook were also hitting demand. “
This should increase pressure on the European Central Bank to tighten policy, with inflation in the monetary union hitting 7.5% last month, according to a preliminary official date released last week, nearly four times the Bank’s 2% target.
Input costs rose at one of the fastest rates in survey history and factories passed that on to customers by raising prices at a record pace. The producer price index rose from 74.2 to 77.3, its highest since S&P Global began collecting data in late 2002.
The ECB is expected to raise its deposit rate before the end of the year, a Reuters poll showed last month.
Summary of news:
- Eurozone manufacturing output growth stagnated in April
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