Eurozone factories struggled to meet soaring demand in March

April 3, 2017 09:17 AM

Factories across the Eurozone struggled to keep up with demand last month despite increasing activity at the fastest rate in nearly six years, according to a survey that showed them again hiking prices.

IHS Markit's final manufacturing Purchasing Managers' Index for the Eurozone rose to 56.2 in March, the highest since April 2011, from February's 55.4. It was in line with a flash estimate and far above the 50 mark that separates growth from contraction.

An index measuring output, which feeds into a composite PMI due on Wednesday, rose to a near six-year high of 57.5 from 57.3. The flash estimate was 57.2.

"Eurozone manufacturing is clearly enjoying a sweet spell as we move into spring, but it is also suffering growing pains in the form of supply delays and rising costs," said Chris Williamson, chief business economist at IHS Markit.

"The survey is also signaling the highest incidence of supplier delivery delays for nearly six years, underscoring how suppliers are struggling to meet surging demand."

A sub-index measuring delivery times fell to 41.9 from 43.9, its lowest reading since May 2011. New orders surged despite prices charged rising faster than in any month since June 2011.

Signs of accelerating activity and price rises will be welcomed by policymakers at the European Central Bank who have for years failed to get inflation anywhere near their target.

Inflation slowed in March by far more than economists polled by Reuters had expected, driven down mostly by a deceleration of energy price rises, official estimates showed on Friday.

Prices in the 19 countries sharing the euro rose 1.5 % year-on-year, Eurostat estimated, down from a four-year high of 2.0 % recorded in February. The Bank wants inflation of just under 2 %.

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