Accumulated factory orders hit record in Europe

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(Bloomberg) – Backorders at European factories rose to an all-time high in August as companies struggled to meet demand amid widespread bottlenecks in the global supply chain.

There were “clear signs of strong capacity constraints,” according to an IHS Markit survey of purchasing managers, which showed that the manufacturing output deficit relative to orders exceeded a 24-year record seen in July.

While the eurozone economy is recovering from the shutdowns triggered by the coronavirus, shortages of parts and raw materials and a lack of shipping capacity are proving more persistent than initially expected, threatening to delay the recovery.

The problem also carries the risk of driving inflation, which is already at a 10-year high of 3%, due to energy and a number of special factors. The survey revealed that some of the cost pressures faced by manufacturers and their customers decreased slightly, but remained at historically high levels.

“Eurozone manufacturers reported another month of strong production in August,” said Chris Williamson, chief business economist at IHS Markit. “However, the main problem was again the lack of components, as suppliers cannot produce enough parts or face a lack of shipping capacity to meet logistics demand.”

There were also signs that southern European countries, which were initially much more affected by the pandemic than their northern neighbors, are recovering. While the general indicator of manufacturing activity in the euro area fell to 61.4 from 62.8 a month earlier, it rose in Italy, Spain and Greece.

Nota Original:Europe’s Factory Backlog Hits Record on Global Supply Squeeze

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