EU manufacturing activity slowed further in April

Eurozone manufacturing Purchasing Managers’ Index came at 55.5 in April, hitting the lowest in fifteen months, on a drop from 56.9 in March, although slightly above consensus at 55.3.

The figure still holds above 50 threshold that separates growth from contraction, however, falling numbers since the beginning of the year, signal that factory output growth is rapidly losing steam.

Factories continue to struggle to source raw materials, while demand was knocked by surging prices and darkening economic outlook, as war in Ukraine and the latest Covid lockdowns in China, added to persisting problem with supply shortages.

Sharply rising prices helped input costs to rise at the record fastest pace and impacted output prices, pushing the index that measures output prices to the record highs that increases pressure on the European Central Bank to start tightening its monetary policy, as inflation in the Eurozone rose to a record high of 7.5%, almost four times the central bank’s 2% target.

The ECB signaled it will end its asset purchases in coming months and start raising interest rates before the end of 2022.