BERLIN (Reuters) – Germany manufacturers reported slower growth and far more pessimistic expectations for factory activity in March, as the war in Ukraine weighed on export demand and led to renewed supply bottlenecks, a survey showed on Friday.
S&P Global’s final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of Europe’s biggest economy, slipped to an 18-month low of 56.9 from 58.4 in February.
Analysts polled by Reuters had on average expected a reading of 57.6.
After easing in recent months, supply delays worsened, input price inflation picked up again and goods producers became pessimistic about their year-ahead outlook for the first time since the first COVID-19 wave, the survey showed.
“Manufacturers have been hit by dual supply and demand shocks,” said Phil Smith, Economics Associate Director at IHS Markit.
“Fresh disruption to raw materials and key components has constrained production, while the war-related sanctions and heightened uncertainty in the market have dented export sales.”
Goods producers came under renewed pressure from surging input costs, whose inflation rate accelerated for the first time in five months amid sky-rocketing global commodity prices, Smith said.
The data was collected between March 11 and March 24, between two and four weeks after Russia invaded Ukraine in the biggest attack on a European state since World War Two.
(Reporting by Zuzanna Szymanska; editing by John Stonestreet)
