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Eurozone Manufacturing Growth At 15-Month Low

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Eurozone manufacturing activity grew at the slowest pace in more than a year in April amid sustained supply-side pressures and disruptions to demand and production due to the ongoing war in Ukraine, survey data from S&P Global showed on Monday.

The final manufacturing Purchasing Managers’ Index fell to a 15-month low of 55.5 in April from 56.5 in the previous month. However, this was above the flash reading of 55.3.

Production expanded at the slowest pace seen across the current growth sequence which began in July 2020. Similarly, the increase in new business was moderate and the weakest in the 22-month growth sequence.

Production growth was also weighed down by ongoing and severe supply-chain disruptions in April.

As a consequence of supply shortfalls, vendors raised their prices for raw materials and components. Input price inflation was the strongest in five months. To combat margin pressures, manufacturers lifted their factory gate charges by the greatest extent on record.

Although producers increased their purchases, the increase in purchases was the weakest since November 2020. Backlogs of work increased again in April but the rate of accumulation of outstanding business was the weakest since January 2021.

The rate of jobs growth was slightly faster than in March and outpaced its historical average by a notable margin.

Finally, after slumping to their lowest since May 2020, future output expectations strengthened slightly in April. That said, business confidence remained well below that seen in February.

“In short, the eurozone manufacturing sector looks set for a difficult period of falling production and surging prices,” said Chris Williamson, chief business economist at S&P Global.
Latest survey data for Germany was particularly noteworthy as both new orders and output slipped into contraction territory for the first time since June 2020. The final S&P Global/BME came in at a 20-month low of 54.6 in April, down from 56.9 in March. The flash reading was 54.1.

Meanwhile, the French manufacturing sector growth continued to improve in April as new orders and production recorded faster rates of expansion. The manufacturing PMI advanced to 55.7 in April from 54.7 in March and remained above the flash 55.4.

Italy’s manufacturing activity posted its slowest pace of expansion since December 2020. The factory PMI dropped to 54.5 from 55.8 in the previous month.

The survey signaled a further loss of momentum in the Spanish manufacturing sector, reflecting the impact of recent transport strikes, uncertainty over the ongoing war in Ukraine and inflation concerns. The PMI fell more-than-expected to 53.3 in April from 54.2 in March. The reading was seen at 54.0.

Sweden Manufacturing Growth Lowest Since August 2020

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