LONDON (Reuters – The euro zone’s manufacturing growth slowed as the factories were faced with supply shortages, high costs and a decline in demand. This was according to a survey that suggested that people are switching to recreation and tourism.

S&P Global (NYSE:)’s final manufacturing Purchasing Managers’ Index (PMI) fell to 54.6 in May from April’s 55.5, its lowest since November 2020, but did come in ahead of a preliminary reading of 54.4. Any reading above 50 is indicative of growth.

A composite PMI, an index that measures output and is used to calculate economic health, was upped from 50.7 to 51.3.

“Euro area manufacturers continue to struggle against the headwinds of supply shortages, elevated inflationary pressures and weakening demand amid rising uncertainty about the economic outlook,” said Chris Williamson, chief business economist at S&P Global.

However, demand shifting towards services has contributed to the sector’s declining health.”

As economies have reopened following the coronavirus pandemic citizens have are enjoying vacations and recreational activities again, S&P Global said.

Although the PMI for flash services fell to 56.3 in May from 57.7 earlier, it suggests slower growth.

The war in Ukraine has caused damage to supply chains and forced factories to pay more for raw materials. Some of these costs have been passed onto consumers to weaken the demand.

Inflation in the Euro zone rose to an all-time high of 8.1% last May according to official data. New orders PMI dropped to 48.7 from 51.6 on Tuesday, the lowest reading since June 2020.

Williamson stated that the main driver for the drop in orders in the past two years was the continuing supply crunch, which is accompanied by price pressures. Williamson also mentioned that producers of raw materials and goods have raised their prices again in response to recent energy price increases.