Eurozone factories accelerate growth in January as bottlenecks are eased: PMI

London — Last month, the relief of supply chain bottlenecks accelerated manufacturing activity in the euro area, but improvements were not evenly distributed across Member States and factories were still facing high inflationary pressures. The investigation on Tuesday showed.

IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) rose from 58.0 in December to a five-month high of 58.7 in January, below the initial “flash” estimate of 59.0. It exceeds the 50 mark that separates growth and contraction.

The indicator measurement output, which was supplied to the compound PMI due on Thursday and is considered a good indicator of economic health, jumped from 53.8 to 55.4.

Chris Williamson, Chief Business Economist at IHS Markit, said:

“But the resurrected growth in Germany, the Netherlands and Austria, in contrast to the slowdown in Italy, Spain and Greece and the stagnation of production in France, does not spread the improvement evenly across the euro area.”

Raw material prices have continued to rise, albeit at a slower pace than in December, and factories have passed much of their burden to consumers. The output price index rose from 70.2 to 72.7. This is the second highest value in almost 20 years.

Inflation in the euro area will be hotter than previously expected throughout 2022, putting pressure on the European Central Bank to tighten policies as the pandemic Omicron wave passes, according to economists polled by Reuters last month.

The ECB, which meets Thursday, has resisted stricter policy demands and is sticking to the view that price pressures will ease this year.