Euro Zone Factory Growth, Input Costs Hit Record Highs PMI

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Euro zone manufacturing activity expanded at a record pace in May, according to a survey on Tuesday which suggested growth would have been even faster without supply bottlenecks that have led to an unprecedented rise in input costs.

The blocs economy has been ravaged by the coronavirus pandemic over the past year, with governments forcing much of the regions dominant service industry to close. But factories largely remained open, and restrictions in various countries have gradually been eased.

IHS Markits final Manufacturing Purchasing Managers Index PMI rose to 63.1 in May from Aprils 62.9, above an initial 62.8 flash estimate and the highest reading since the survey began in June 1997.

An index measuring output, which feeds into a composite PMI due on Thursday and is seen as a good guide to economic health, eased from Aprils 63.2 to 62.2. Anything above 50 indicates growth.

Surging output growth adds to signs that the economy is rebounding strongly in the second quarter, said Chris Williamson, chief business economist at IHS Markit.

However, May also saw record supply delays, which are constraining output growth and leaving firms unable to meet demand to a degree not previously witnessed by the survey.

Disruptions caused by the global coronavirus pandemic are still having a huge impact on supply chains, making it a sellers market for the raw materials that factories need.

The input prices index soared to 87.1 from Aprils 82.2, easily the highest reading on…

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