LONDON (Reuters – Euro zone manufacturing output growth stalled in October as factories had difficulty sourcing raw materials, while consumers were affected by high prices and worries about the future economic outlook.

Russia’s invasion in Ukraine and renewed COVID-19-related lockdowns in China have created supply chain bottlenecks. This has left many factories in trouble. The survey also did not show any forward-looking indicators that would indicate a turnaround.

S&P Global (NYSE:)’s final manufacturing Purchasing Managers’ Index (PMI) fell to a 15-month low of 55.5 in April from March’s 56.5, just above below an initial “flash” estimate of 55.3 and still comfortably above the 50 mark that separates growth from contraction.

However, the output index, which feeds into an economic composite PMI, fell to 50.7 from 53.1. It was the lowest point since June 2020 as the bloc had been enduring the first waves of the coronavirus epidemic.

“Manufacturing output came to a near standstill across the euro zone in April,” said Chris Williamson, chief business economist at S&P Global.

Companies reported not only that they were experiencing continuing problems with components shortages due to the Ukraine war, new China lockdowns and rising prices but also that there was growing uncertainty over the outlook for the economy.

The survey revealed that input costs rose at the highest rate in its history. This was reflected by factories raising prices at record rates, which allowed them to pass on their increased profits to their customers. The output prices index climbed to 77.3 from 74.2, its highest since S&P Global started collecting the data in late 2002.

This is expected to increase pressure on the European Central Bank (ECB) to tighten its policy, as the inflation rate in the currency union has reached 7.5%, preliminary official dates show last week. That’s almost four times what the Bank wants to achieve at 2%.

According to a Reuters survey, the ECB would likely increase its deposit rate by year’s end. [ECILT/EU]