MADRID (Reuters – Spanish factory activity grew rapidly in September, but disruptions to supply chains and scarcity of raw material weighed down on the sector, a survey revealed on Friday.

IHS Markit’s Purchasing managers’ index (PMI), which measures manufacturing activity in Spain, dropped to 58.1 in September after an August reading of 59.5. The reading was nevertheless well above 50.0, which is indicative of an increase in activity. It was also not far away from 60.4, which was its highest level in nearly two decades.

Paul Smith, an economist at IHS Markit said that “Growth has clearly been restrained by severe-and ongoing supply-side delays which show little indication of dissipating.”

Mismatches between demand and supply for raw material and disruptions to the supply chain led to increased input prices. Manufacturers were encouraged to create more inventories to support their production.

According to companies, demand is still strong as clients are placing advance orders in order to avoid delivery delays.

Spanish statistics agency INE downgraded 2Q economic growth to 1.1% this week, from 2.8% in the initial estimate. This raises concerns over recovery’s pace.

Spain’s economy contracted 0.4% in its first quarter, as a result of increasing COVID-19-related cases.

Following the record 10.8% contraction in 2020, the government predicts that this year’s economy will expand 6.5%.