Euro zone factory output growth stalls in April

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Euro zone factory output growth stalls in April

In April, the Euro zone factory output growth stalled - A worker at the German manufacturer of silos and liquid tankers, Feldbinder Special Vehicles, moves rolls of aluminium at the company's plant in Winsen.

LONDON Reuters manufacturing output growth stalled last month as factories struggled to source raw materials while demand took a knock due to steep price increases and fears about the economic outlook, a survey showed.

Russia's invasion of Ukraine coupled with renewed COVID 19 related lockdowns in China have exacerbated supply chain bottlenecks and left factories struggling and forward looking indicators in the survey, which did not point to an imminent turnaround.

S&P Global's final manufacturing Purchasing Managers' Index PMI fell to a 15 month low of 55.5 in April from March's 56.5, just above an initial flash estimate of 55.3 and still comfortably above the 50 mark that separates growth from contraction.

The index, which feeds into a composite PMI due on Wednesday, fell to 50.7 from 53.1, its lowest since June 2020, when the bloc was enduring the first wave of the coronaviruses, as a good gauge of economic health.

Chris Williamson, chief business economist at S&P Global, said manufacturing output came to a near standstill in the euro zone in April.

The problems with component shortages were exacerbated by the Ukraine war and the new lockdowns in China, but rising prices and uncertainty about the economic outlook were also hitting demand, according to companies. Input costs went up one of the fastest rates in the survey's history and factories passed that on to customers by raising their prices at a record pace. The output prices index climbed to 77.3 from 74.2, its highest since S&P Global started collecting the data in late 2002.

The European Central Bank was expected to tighten its policy as inflation in the currency union reached 7.5% last month, which is more than four times the Bank's 2% target, according to the preliminary official date last week.