LONDON, Oct 5 (Reuters) – Business progress within the euro zone remained sturdy final month however was hit by ongoing provide points constraining exercise whereas elevated inflationary pressures dented demand, points that are more likely to proceed, a survey confirmed on Tuesday.
IHS Markit’s ultimate composite Purchasing Managers’ Index (PMI), seen as a very good information to financial well being, sank to 56.2 final month from August’s 59.0, though nonetheless nicely above the 50 mark separating progress from contraction and simply above a 56.1 “flash” estimate.
Demand fell to a five-month low as corporations handed on a part of rising enter prices, which rose at a document tempo, to customers. The composite output costs index rose to 59.1 from 58.3, not removed from survey highs set in the summertime months.
“The current economic situation in the euro zone is an unwelcome mix of rising price pressures but slower growth. Both are linked to supply shortages, especially in manufacturing, which has seen a steeper fall in output growth than services,” mentioned Chris Williamson, chief enterprise economist at IHS Markit.
“Although for now the overall rate of expansion remains relatively solid by historical standards, the economy enters the final quarter of the year on a slowing growth trajectory.”
On Friday, a producing PMI confirmed progress remained sturdy in September however exercise suffered from provide chain bottlenecks, and the bloc’s dominant service business additionally noticed the tempo of growth sluggish.
A PMI for the providers business fell to 56.4 from 59.0, its lowest since May, whereas the brand new enterprise index dropped to 55.3 from 57.9.
“The service sector is also reporting a marked cooling of demand growth which can be less easily explained by shortages, and is in part linked to customers being deterred by concerns over the persistence of the pandemic and by higher prices,” Williamson mentioned.