Eurozone business growth fell to its lowest level in six months in October due to soaring price pressures

Bangalore / London — Eurozone business growth of 6 months in October as supply chain bottlenecks and logistics issues related to the COVID-19 pandemic caused input prices to rise at the fastest rate in over 20 years. It fell to the lowest level for the first time.

Government regulations have been lifted in the currency area, but the shortage of raw materials in the manufacturing industry is impacting growth, weakening the stagnation of unleashed demand throughout the service industry.

IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI), a good indicator of overall economic health, dropped from 56.2 in September to a 6-month low of 54.2 in October, down from the previous 54.3 ” Slightly below the “flash” estimate.

“PMI suggests that the eurozone economic recovery will slow significantly in the fourth quarter, as supply shortages worsen across the region, especially for manufacturers,” said Jessica Hinds of Capital Economics. Is. “

“They also show increasing price pressure, even in the surrounding area.”

A Reuters poll last month suggested that block growth would drop to 1.1% this quarter after a 2.0% increase in the third quarter.

The PMI index for services fell from 56.4 in October to a 6-month low of 54.6. This is one step below the tentative estimate of 54.7, but above the 50 mark that separates growth and contraction.

However, demand weakened and the New Business Index fell from 55.3 to 55.1.

Eurozone manufacturing activity remained strong last month, but was reduced by supply chain bottlenecks, a study showed Tuesday.

These bottlenecks have caused raw material costs to skyrocket, and the composite input price index has risen from 70.9 to 73.2, much higher since the survey began in mid-1998.

“Inflation will peak at 4.5%. This is very high, but it could weaken by the end of next year. For example, there are already promising signs of container shipping,” said Holgersh of Berenberg. Meading says.

Supply constraints meant that growth slowed for three months in Germany, Europe’s largest economy, as well as in France, Spain and Italy.

In the UK, outside of the monetary union, companies reported faster growth and data showed Wednesday, but the Bank of England could be concerned about record increases in costs faced by companies being passed on to consumers. Highly sexual.

The BoE will announce the long-awaited policy decision of the year on Thursday. Banks have to choose between raising borrowing costs from record lows or saying they are waiting to make sure the post-blocking economy is ready to raise rates.

In the United States, service industry activity indicators surged to record highs last month as a decline in the number of COVID-19 cases boosted demand.

By Shrutee Sarkar and Jonathan Cable