LONDON, April 3 (Reuters) - Activity at struggling
factories across the euro zone fell further last month as
consumers feeling the pinch from rising living costs cut back,
according to a survey which did show the cost of manufacturing
fell for the first time since mid-2020.
S&P Global's final manufacturing Purchasing Managers' Index
(PMI) fell to 47.3 in March from February's 48.5, just ahead of
a preliminary reading of 47.1 but below the 50 mark separating
growth from contraction for a ninth month.
An index measuring output, which feeds into a composite PMI
due on Wednesday that is seen as a good guide to economic
health, did however rise to a 10-month high of 50.4 from 50.1.
"Euro zone manufacturing remains in troubled waters, with
factories reporting a fall in demand for goods for an eleventh
straight month amid the surging cost of living, tighter monetary
policy, a shift to inventory destocking and subdued customer
confidence," said Chris Williamson, chief business economist at
S&P Global.
Lower energy costs and healing supply chains did however
mean input prices fell for the first time since July 2020 - just
when the coronavirus pandemic was cementing its grip on the
world. The sub-index sank to 46.8 from 50.9.
That drop allowed factories to increase their charges at the
slowest pace in over two years, likely welcome news to
policymakers at the European Central Bank who have so far failed
to get inflation anywhere near their 2% target.
"These lower costs are feeding through to slower increases
in selling prices, which should in turn feed through to lower
prices paid for goods by consumers," Williamson said.
Despite having embarked on the most aggressive tightening of
monetary policy in the central bank's history, prices rose 6.9%
last month, official data showed on Friday.
After delivering an expected 50 basis point increase to
interest rates last month a Reuters poll suggested the ECB would
follow through with 25 basis points lifts at its May, June and
July meetings.
(Reporting by Jonathan Cable; Editing by Toby Chopra)
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