LONDON, May 3 (Reuters) – Eurozone factory activity growth hit an all-time high last month, fueled by increased demand, prompting increased hiring, although constraints on supply led to an unprecedented rise in unfulfilled orders, according to a survey.
While a third wave of coronavirus infections in Europe has forced some states to close much of their important service sector, factories have largely remained open.
IHS Markit’s final purchasing managers index (PMI) for the manufacturing sector rose to 62.9 points in April from 62.5 in March, which is still below the initial estimate of 63.3 is the highest reading since the survey began in June 1997.
The index that measures production, which contributes to the composite PMI to be released on Wednesday and is considered a good guide to economic health, fell from the March record high of 63.3 points to 63.2. Any value greater than 50 indicates growth.
“The euro zone manufacturing sector is booming,” said Chris Williamson, chief economist at IHS Markit.
“However, supply restrictions are also signaling record levels, generating a record backlog of backorders at factories.”
The backorder index soared to 61.5 from 60.4, the highest reached by the survey.
With the cost of raw materials rising at a near record rate, factories were forced to raise their own prices at the strongest rate since IHS Markit began collecting the data.
“The big uncertainty is how long these upward price pressures will persist and to what extent these higher costs of goods and services will affect consumers,” Williamson said.
Still, inflationary pressures could be welcomed by monetary policy makers at the European Central Bank, who have failed to bring inflation close to target despite ultra-lax monetary policy.
(Reporting by Jonathan Cable; Editing by Hugh Lawson; Translated by Darío Fernández)