Factories struggling as supply constraints hit, costs rise

LONDON/TOKYO, Oct 1 (Reuters) – Global manufacturing activity took a big hit from supply chain bottlenecks and escalating costs, exacerbated by pandemic-induced factory shutdowns in Asia and signs of slowing Chinese growth, surveys showed on Friday.

While countries where outbreaks of the Delta coronavirus variant receded saw an improvement in activity, growth shrank in some as chip shortages and supply disruptions impacted those still struggling to shake off the hit from COVID-19.

Euro zone and British manufacturing growth remained strong but activity suffered from logistical issues, product shortages and a labour crunch that are likely to persist and keep inflationary pressures high.

“Though some of the bottlenecks should soon start to ease, many sectors – most notably those requiring semiconductors – are likely to face disruption for much of 2022,” said Martin Beck, senior economic advisor to the EY ITEM Club.

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

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

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Source: Reuters