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Euro zone factory growth accelerated in Jan as bottlenecks eased -PMI -Breaking

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© Reuters. FILE PHOTO – The Frankfurt skyline, with its financial district, and headquarters of European Central Bank (ECB), were photographed on December 4, 2018, in Frankfurt. REUTERS/Kai Pfaffenbach

LONDON (Reuters), Despite the fact that supply chain bottlenecks have eased in recent months, manufacturing activity in Eurozone accelerated. However, this improvement wasn’t evenly distributed across members and some factories continue to face high inflationary pressures. A survey was conducted Tuesday.

IHS Markit’s manufacturing final Purchasing Managers’ Indice (PMI) increased to a five month high of 58.7 from December’s 58.0. It was lower than the initial “flash” estimate of 69.5 but well above the 50 mark that separates growth from contraction.

The output index, which feeds into the composite PMI due Thursday, has jumped from 53.8 to 55.4.

Chris Williamson of IHS Markit, chief economic economist, stated, “Eurozone manufacturers seem to be faring better against the Omicron storm than the COVID-19 waves before them,”. He said that firms reported significant production and orderbook improvements in the first four months of January.

The improvement in the euro area is not evenly distributed, but there has been a resurgent growth of Germany, Austria, and the Netherlands, which contrasts with slower growth in Italy, Spain, and Greece, and close-to-stalled production at France.

Although raw material prices rose at a faster pace than December, factories were able to pass more of the burden onto consumers. This was the second-highest output price index in nearly two decades, at 72.7.

Euro zone inflation looks set to heat up in 2022. According to economists polled at Reuters last month. This may make it more difficult for the European Central Bank, who could be pressured to loosen policy when the Omicron waves of pandemic are over.

The ECB meets Thursday and has resisted the calls for tighter policies, remaining true to its view that prices will fall this year.

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