Wednesday, October 20, 2021

Factories struggling due to supply constraints, cost escalation

LONDON/TOKYO – Global manufacturing activity took a big hit from supply chain bottlenecks and rising costs, signs of pandemic-induced factory closures in Asia and slowing Chinese growth, surveys showed on Friday.

While countries that have slowed down in the delta coronavirus outbreak have seen an improvement in activity, some have slowed growth as chip shortages and supply disruptions hit those still living with COVID-19. Struggling to remove the hit from.

Eurozone and British manufacturing growth remained strong, but activity faced logistical issues, product shortages and a labor crisis that is likely to sustain and keep inflationary pressures high.

Martin Beck, senior economic adviser at EY ITEM Club, said: “While some of the barriers should start to ease soon, many sectors – especially those in need of semiconductors – could face more disruption by 2022. “

“This signal activity is likely to remain constrained for some time to come.”

IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) fell from 61.4 in August to 58.6 in September, and Britain’s PMI fell for the fourth straight month to 57.1 from 60.3. Anything above 50 indicates growth.

In Germany, Europe’s biggest economy was humming almost non-stop during the pandemic lockdown that has hit the services sector, but shortages of intermediate goods and some raw materials are now holding the industry back.

Growth in French manufacturing weakened slightly more than initially forecast, its PMI showed, as problems with the supply of goods weighed on the industry.

Those supply constraints kept pressure on the cost of raw materials factories and manufacturers passed some of those increases to customers and the euro zone output price index hit a record high in the summer.

Inflation in the general currency area rose to a 13-year high of 3.4 percent last month, preliminary official data showed on Friday, well above the European Central Bank’s target of 2.0 percent.

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Manufacturing growth in the United States also weakened last month, data expected later on Friday show.

asian tension

China’s dwindling economic momentum dealt a fresh blow to the region’s growth prospects, with the official PMI on Thursday showing the country’s factory activity unexpectedly shrank in September due to widespread restrictions on electricity use.

While the private Caixin/Market Manufacturing PMI outperformed expectations after a fall in August, rising signs of weakness in the world’s second-largest economy are clouding the outlook for neighboring countries.

Makoto Saito, an economist at the NLI Research Institute, said, “While the coronavirus restrictions on economic activity may be gradually lifted, the slow rate at which it will happen means that Southeast Asian economies remain stable for the rest of this year.” Will stay.”

Manufacturers in Japan, the world’s third-largest economy, faced pressure from pandemic restrictions and heightened supply chain disruptions, as well as raw material shortages and delivery delays, and its PMI hit its slowest pace of expansion since February. marked.

Taiwan’s factory activity continued to expand but Vietnam’s index remained unchanged at its slowest pace in more than a year.

The PMIs of South Korea, India and Indonesia rose.

Alex Holmes said, “While the regional PMI shows that disruption from large virus waves in the region is easing to some extent, unfinished orders continue to pile up, meaning further disruptions in the supply chain will remain for some time to come.” Will stay.” Emerging Asia Economist at Capital Economics.

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This News Originally From – The Epoch Times

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