Euro zone business activity expanded at its weakest rate in six months in October as supply chain constraints related to the COVID-19 pandemic pushed up input prices.
- Government restrictions are being eased off in the currency bloc but shortages of raw materials in the manufacturing sector are hampering growth and the higher demand in the service sector is falling.
- IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI), a good measure of overall economic health, dropped to a six-month low of 54.2 in October from 56.2 in September.
- Chris Williamson, chief business economist at IHS Markit stated that euro zone growth has slowed significantly at the start of Q4, with manufacturing hampered by supply chain challenges and services losing pace as gains from lockdowns wanes.
- The services PMI index dropped to a six-month low of 54.6 in October from 56.4, a lower than the preliminary estimate of 54.7 but remained above the 50 mark separating growth from contraction.
Demand weakened though and the new business index fell to 55.1 from 55.3.
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Source: IHS Markit.
