Euro zone Oct. Factory Growth Hampered by Supply Constraints, Price Pressures-PMI

Manufacturing activity remained elevated in the euro zone last month but supply constraints and logistical problems triggered an increase in costs and hampered growth.

Source: IHS Markit.

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Ongoing disruptions triggered by the COVID-19, together with a shortage of heavy goods vehicle drivers led to product shortages and left factories struggling to obtain raw materials.

IHS Market’s final manufacturing Purchasing Managers’ Index (PMI) plunged to an eight-month low of 58.3 in October from September’s 58.6, below an initial 58.5 “flash” estimate but still above the 50-mark separating growth from contraction.

A gauge measuring output, which contributes to a composite PMI and is seen as a good measure to economic health, plunged to 53.3 from September’s 55.6.

Chris Williamson, chief business economist at IHS Markit stated that euro zone manufacturers posted a worsening of the supply chain situation in October that hampered production growth sharply during the month.

Even though the bloc’s economy continued to grow over the summer as activity recovered after COVID-19, inflation is also beating past expectations.