Ekonomické zprávy
02.11.2021

Eurozone manufacturing PMI drops to eight-month low in October

According to the report from IHS Markit, the eurozone manufacturing sector lost further momentum in October, as supply-side issues interrupted production schedules and dented order books, causing growth of both metrics to slow. Firms’ struggles to obtain manufacturing inputs was also clear in survey data, with supplier delivery times lengthening to one of the most severe extents on record. Subsequently, input cost and output price inflation rates surged to new survey peaks.

The final reading of the Manufacturing PMI dipped to 58.3 in October, from the ‘flash’ estimate of 58.5 and down from 58.6 in September. Overall, this signalled the slowest improvement in manufacturing sector conditions since February.

Supply-side issues were central to the softer expansion in the euro area manufacturing sector during October. Average lead times on input deliveries lengthened drastically and to the third greatest extent in the survey history (since 1997), beaten only by those seen in May and June. 

Difficulties in acquiring the inputs necessary for production was a frequently-cited reason by companies who lowered output in the latest survey period. Although production increased, the rate of expansion slumped to the slowest in the current 16- month growth sequence.

These issues had a similar impact on order books, according to firms. New business intakes continued to rise during October, but the rate of expansion was the weakest since January. Anecdotal evidence suggested that demand conditions had eased because of supply-side problems, as appetite for finished and semi-finished goods waned due to reduced availability. Similarly, new export orders expanded at the weakest pace since the beginning of the year.

Finally, although business confidence remained strong and above its historical average in October, the level of positive sentiment slumped to a one-year low.

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