The supply chain node is holding back the EU industry but Italy is running

The supply chain node is holding back the EU industry but Italy is running
The supply chain node is holding back the EU industry but Italy is running

AGI – Problems related to supply chains continue to weigh on European industry, but despite the supply chain node Italy continues to run and in October overtakes Germany, France and Spain with an almost record improvement in the conditions of the manufacturing sector.

In Italy, customer demand strengthened further last month, e the latest expansion in new orders was the fastest since June.

As a result, despite having declined slightly since September, output has again reported strong growth, at one of the fastest levels in survey history. The SME in the Eurozone, on the other hand, falls to an eight-month low.

Here is how it went in the Eurozone and in the main economies of the Old Continent at 58.3 points, while remaining well above the threshold of 50 which indicates an expansion of activity.

Eurozone, the manufacturing PMI falls to 58.3, an 8-month low

Manufacturing activity is robust in the euro zone but Supply chain bottlenecks and logistical problems have pushed input costs and limited growth. The ongoing disruptions caused by the pandemic, coupled with a shortage of HGV drivers, have caused shortages of products and left factories in trouble due to a lack of necessary raw materials. IHS Markit’s final PMI fell to an eight-month low of 58.3 in October from 58.6 in September, while the initial estimate was 58.5.

Despite being down, it still remains above the threshold of 50 that separates growth from contraction. “Eurozone producers reported a deterioration in the supply chain situation in October, which held back production growth during the month,” said Chris Williamson, chief business economist at IHS Markit.

“Average lead times for raw materials have lengthened at a rate that is only exceeded twice in nearly a quarter-century of survey data, as companies reported that demand, once again, exceeded supply for a wide variety of inputs and components “.

In Italy, the manufacturing SME is the highest for 4 months

The Italian manufacturing sector observed another month of rapid growth in October. At the start of the fourth quarter, however, disruptions in the supply chain continue to hold back the sector. Average delivery times have lengthened to a near-record high due to material shortages and transport problems, further exacerbating inflationary pressures already at unprecedented levels

Despite this, the industry’s Markit PMI Index – which in a single digit provides a picture of developments in general manufacturing conditions – rose to 61.1 in October from 59.7 in September, signaling the sixteenth consecutive month of improvement of the state of health of the sector.

The latest figure was also the highest since June and the third highest ever recorded. “Supply problems are undoubtedly slowing the growth of the sector in October, with several manufacturing companies noting that they were unable to fulfill some orders due to a shortage of goods, which also affected their performance. production expectations for the next 12 months, “notes Lewis Cooper, Economist at Ihs Markit.

But he adds: “Overall the sector continues to excel overall, although the loss of vigor in production growth mainly reflects the above, while ongoing sales remain strong. That said, with demand for goods increasing globally, before the end of the year we could see a more significant impact of supply disruptions on the performance of the manufacturing sector in Italy “.

In Germany, the SME is at its lowest in 9 months

Problems related to the suplly chain remain a major obstacle for the German manufacturing sector, which slows down in October. The manufacturing PMI index fell last month to 57.8 points from 58.4 in September, below analysts’ expectations at 58.2 points.

“Production levels across the manufacturing sector are increasingly blocked due to supply chain management bottlenecks – noted Phil Smith, Economics Director of Ihs Markit, commenting on the data – according to the companies interviewed, the slowdown in car production it is dragging other sectors of the manufacturing economy down, as companies in that sector scale back orders for components and materials. “

In France, SMEs fell for the first time since January

Manufacturing production declined for the first time since January in France. IHS Markit’s seasonally adjusted PMI index fell to 53.6 points in October, down from 55 points in September and its lowest since January.

Also in this case, the serious delays in supplier deliveries are a factor which left many companies with insufficient quantities of product. While remaining above the 50-point threshold, which indicates an expansion, the two main components of the index – new orders and production – both recorded new contractions.

In Spain, the SME is at least 7 months

Spanish manufacturing activity in October grew at the slowest pace since March. The PMI Markit index for manufacturing fell to 57.4 points from 58.1 in September. Interruptions in the supply chain, as well as rising inflation, always weigh. However, the figure remains well above the 50 point threshold, which indicates an expansion in activity.

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