Same old supply issues disrupting the manufacturing sector in Europe

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(Kitco News) - This morning manufacturing PMI's are telling a familiar story assupply-side issues are forcing a slowdown despite demand remainingfirm.The report said, "The eurozone manufacturing sector lostfurther momentum in October, the latest PMI data showed, as supply-side issuesinterrupted production schedules and dented order books, causing the growth ofboth metrics to slow."

Looking deeper into the report it was not all bad news. PMImovements varied by euro area constituents during October. The fastest-growingmanufacturing sectors, the Netherlands, Ireland, and Italy respectively, allrecorded stronger expansions, as did Greece. In regards to the economicpowerhouse of Europe (Germany), surging input costs drove a record rise infactory gate charges.

Phil Smith, Associate Economics Director at IHS Markitnoted "Worryingly, the supply problems took a turn for theworse in October, with lead times on purchases lengthening to the greatestextent for three months. Adding to this, the rate of cost inflation has creptback up towards the record highs seen in the summer, leading to anunprecedented rise in factory gate prices and putting more inflationarypressure into the system." He then added "Manufacturers lost furtherconfidence that these issues
will be resolved sooner rather than later, withbusiness expectations now at their lowest since August 2020."

It is fair to remember that this is the final reading post flashestimates so none of this has come as a massive surprise. But nevertheless, thesupply side issues are a worry due to the inflation woes currently being facedby the ECB. As the likes of India and China battle with the COVID pandemic, thesituation must be watched closely during the winter months to see if thelockdowns and restrictions escalate.

EU Manufacturing PMI (Oct) 58.3 vs exp 58.5 prev 58.5
German Manufacturing PMI (Oct) 57.8 vsexp 58.2 prev 58.2
French Manufacturing PMI (Oct) 53.6 vsexp 53.5 prev 53.5
Italian Manufacturing PMI (Oct) 61.1 vsexp 59.7 prev 59.7
Spanish Manufacturing PMI (Oct) 57.4 vsexp 58.1 prev 58.1

By Rajan Dhall

For Kitco News

Follow rajfx10rdhall@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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