Eurozone business growth slowed in September due to supply and pricing issues -PMI

LONDON, Oct. 5 (Reuters) – Business growth in the euro area remained strong last month, but was hit by lingering supply issues that dampened activity as high inflationary pressures weighed on the economy. demand, problems that are expected to continue, an investigation found Tuesday.

The IHS Markit Final Composite Purchasing Managers Index (PMI), considered a good indicator of economic health, fell to 56.2 last month from 59.0 in August, although it remains well above the 50 mark separating growth from contraction and just above a “flash” estimate of 56.1.

Demand fell to its lowest level in five months as companies passed some of the rising input costs, which rose at a record pace, to consumers. The composite producer price index fell from 58.3 to 59.1, not far from survey highs set over the summer months.

“The current economic situation in the eurozone is an unfortunate mix of increasing price pressures but slower growth. Both are linked to supply shortages, especially in the manufacturing sector, which has seen a decline in price. output growth stronger than that of services, “said Chris Williamson, director of business economics at IHS Markit.

“Although for now the overall rate of expansion remains relatively strong by historical standards, the economy is entering the last quarter of the year on a slower growth path.”

On Friday, a manufacturing PMI showed growth remained strong in September, but activity suffered from supply chain bottlenecks, and the bloc’s dominant service industry also saw the pace of growth. expansion slow down.

A PMI for the services sector fell to 56.4 from 59.0, its lowest since May, while the new business index fell to 55.3 from 57.9.

“The service sector is also reporting a marked slowdown in demand growth which may be less easily explained by shortages, and is in part related to customers being dissuaded by concerns about the persistence of the pandemic and by rising prices, ”Williamson said.

Reporting by Jonathan Cable; Editing by Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.