China’s adherence to zero-Covid tolerance policies and Russia’s invasion of Ukraine has brought manufacturing “to a near standstill” in Europe, reveals a closely watched survey released today.
Widespread shortages of raw materials used by factories on the Continent caused by Beijing plunging key trade hubs such as Shanghai into lockdown in response to a surge in Covid-19 cases in China has choked output in the bloc’s manufacturing sector.
Moscow’s invasion of Ukraine has added to already heavily gummed up supply chains.
S&P Global’s purchasing managers’ index (PMI) for the eurozone shrank to a 15-month low of 55.5 last month, with output expanding at the slowest rate over the last 22 months.
Soaring energy, raw material and commodity prices drove factories to hike prices at the quickest pace since records began in 2002 in a further sign of the scale and severity of inflationary pressures building in rich economies.
Inflation in the eurozone is already running at its highest rate since the euro was created in 1999 at 7.4 per cent, although the European Central Bank is expected to rein in monetary policy much slower than its central banking counterparts the Bank of England and US Federal Reserve.
Chris Williamson, chief business economist at S&P Global, said: “Manufacturing output came to a near standstill across the eurozone in April, with production merely edging higher at the slowest rate since June 2020.”