LONDON, Apr 1 (Reuters) – Monthly growth in euro zone factory activity last month hit its fastest pace in nearly 24 years in which a major business survey has been conducted, but supply chain disruptions and new restrictions in the region could dampen growth in the near future.
Faced with the third wave of coronavirus infections that is taking over Europe, governments have once again imposed harsh controls on their citizens, harming the service sector that predominates in the block and leaving the momentum of economic recovery in the hands of manufacturers .
The IHS Markit Manufacturing Purchasing Managers Index (PMI) rose to 62.5 in March, down from 57.9 in February, beating the initial estimate of 62.4 and the highest figure on record since it began. the survey in June 1997.
The index that measures production, which is included in the composite PMI to be released on Monday and which is considered a good indicator of economic health, rose to 63.3 from 57.6, well above the 50 barrier that it separates growth from recession, which is a peak in the survey data.
“The manufacturing sector in the euro zone is booming,” said Chris Williamson, chief economist at IHS Markit.
“While focusing on Germany, which posted particularly strong record growth during the month, the upward trend extends across the region as factories benefit from increased domestic demand and rebound in export growth. “.
However, supply chain problems, probably exacerbated by the recent blockade of the Suez Canal, which has led to disruptions to global shipping and ports that could take months to resolve, have led to higher prices, as well as the greater increase in delivery times by suppliers since the beginning of the survey.
Both input and output prices were near record highs. The input price index rose to 79.7 from 73.9, a level not seen in a decade.
“Although the causes of the price hike appear to be temporary, once in relation to the increased restrictions against COVID-19, any additional upward pressure on costs and company selling prices is undesirable,” Williamson said.
Still, as factories struggled to keep up with growing demand, they dramatically increased their workforce and generated a strong workforce.
(Reported by Jonathan Cable; edited by Hugh Lawson; translated by Flora Gómez at the Gdansk newsroom)