Eurozone growth slows as prices jump on supply problems

AFP News Agency

22nd Oct, 2021. 03:52 pm

BRUSSELS: The recovery of the eurozone economy is losing steam, a closely watched survey said on Friday, with big supply chain problems at factories causing price hikes not seen in 20 years.

“The ongoing pandemic means supply chain delays remain a major concern,” warned Chris Williamson, Chief Business Economist at the IHS Markit.

This was “constraining production and driving prices ever higher both in the manufacturing and in the services sector,” he said.

The purchasing managers’ index (PMI), which measures corporate confidence, demonstrated the slowdown clearly.

The IHS Markit said it slipped to 54.3 points in October, after posting 56.2 points in September and a high 59 points in August. A figure above 50 indicates growth.

The IHS Markit said supply problems were especially felt in Germany, the EU’s export powerhouse that depends on the global economy to churn out high-value goods, such as cars and machinery.

While the rate of growth was still there, the IHS Markit said that the eurozone could falter in the near-term “as the pandemic continues to disrupt economies and push prices higher”.

A new spike in the Covid-19 cases in the autumn and winter could again disrupt the economy and cause problems for the customer-facing service sectors, as well, it warned.

One bright spot was hiring, which reached the record levels seen in July. The companies are beefing up staff to try to meet the backlog in orders, the IHS Markit said.