BERLIN (Reuters – In April, German manufacturing activities were affected by weaker demand and supply disruptions. This was due to the conflict in Ukraine and COVID-19 Lockdowns in China. A survey on Monday showed that this impacted the prospects for European goods producers.

IHS Markit’s Final PMI (Purchasing Managers’ Index) for Manufacturing, which makes up about half of the economy, dropped to 54.6 in March from 56.9 during March. It was slightly more than the 54.1 flash reading.

Phil Smith is the Economics Associate Director of IHS Markit. He said that supply chain disruptions combined with falling demand led to manufacturing output being cut for the first-time since the COVID shutdowns at the beginning of 2020.

Smith said that a similar pattern was seen for new orders. This suggests that the demand is slowing.

His comments were accompanied by a warning that “while factory employment has been steadily rising, at a strong pace, it appears it is only a matterof time before the weaker trends in output, new orders, and hiring activity start to flow through, particularly given the manufacturers’ dim outlook.”

It’s still early, but manufacturing is already a problem for the economy. The prospect of further lockdowns in China, as well as any increase in energy crises, will only make this worse.