The latest economic data on Europe confirmed the current crisis: inflation touches a 13-year high, and manufacturing production slows down. Energy prices remain in the foreground.
The latest data on Europe, specifically on the euro area, confirmed the economic problems of the moment: skyrocketing prices, supported by the energy and manufacturing sector struggling for bottlenecks.
Preliminary inflation in the Eurozone has soared as it hasn’t been for 13 years. Meanwhile, the shadow of delays in the most crowded supply chains ever is being felt at the pace of industry growth.
In addition, the energy crisis with increasingly higher prices serves as a backdrop. In the latest European economic data, therefore, the critical issues of the moment are reflected.
Eurozone inflation is boom: prices at their highest since 2008
The figure is preliminary, but it indicates that inflation in the euro area has accelerated beyond forecasts and has reached its highest level in the space of 13 years.
According to data released by Eurostat, consumer prices increased by 3.4% annually in September, compared to an estimated growth of 3.3%.
The index that eliminates volatile components such as food and energy rose to 1.9%, a rate not seen since 2008.
The surge in inflation is mainly driven by the effects of the pandemic and the reopening of economies after long periods of closure.
The ECB expects a peak by the end of the year, before a slowdown in 2022. However, bottlenecks in the supply chain are already lasting longer than expected, and surveys show that companies are starting to shift costs on customers to protect profit margins.
A deep energy crisis is adding to this inflationary pressure. Energy prices rose 1.3% in September and jumped more than 17% from the previous year. Non-energy industrial goods were 2.3% more expensive than in August.
Alert for production in Europe
European producers are increasingly tense about global supply chain problems driving prices up and could last until next year.
An IHS Markit indicator measuring trade activity in the manufacturing sector fell last month, pointing the way to a possible slowdown in the euro area and across the EU.
In the chart reported by Bloomberg, it is evident that growth is weakening for the production sector of the major European economies, such as Italy, Spain, France, Germany.
Eurozone manufacturing PMI
From the beginning of 2021 to the present, the PMI curve of the manufacturing sector has been falling. The ECB itself warned of the persistence of this difficulty in global supplies. In addition, several European companies have been forced to shut down due to energy shortages and too high electricity prices.