THE latest purchasing managers' index (PMI) report from IHS Markit shows that the highly infectious Delta variant of coronavirus disease 2019 (COVID-19) is posing a major risk to Europe's economic rebound, with measures to curb the fast-spreading virus increasing delays across manufacturing supply lines.
Despite business activity in Europe rising at the fastest rate in 21 years, along with accelerating new orders, the composite PMI survey for July found lengthening supply chains were slowing factory output, increasing order backlogs, and hitting business confidence.
Supplier delivery times to European manufacturers - a key barometer of supply chain delays - continued to lengthen at one of the sharpest rates ever recorded by the PMI survey, playing a key role in driving up input costs.
'Supply chain delays remain a major concern for manufacturing, constraining production and pushing firms' costs higher,' Chris Williamson, chief business economist at IHS Markit, said in his analysis of the July PMI.
'These higher costs have led to a near-record increase in average selling prices for goods and services, which is likely to feed through to higher consumer prices in coming months.'
However, European businesses were most concerned about the resurgence of the Covid-19 pandemic, with those surveyed expressing fears that the Delta variant posed 'a major risk' to the regional economic outlook.
'Not only have rising case numbers led to a slide in business optimism to the lowest since February, further Covid-19 waves around the world could lead to further global supply chain delays, and hence, ever-higher prices,' Mr Williamson noted.
A global shipper who asked not to be identified echoed that point, telling IHS Media: ' My message to our C-suite executives is that the biggest threat to the market in general over the next 12 months is going to be Covid-19 outbreaks at ports.'
Also overshadowing the robust demand is the continued impact of the pandemic, which was very much on the mind of Allard Castelein, CEO of the Port of Rotterdam Authority, when he announced his port's first-half performance this week.
'The economy is picking up, as is world trade,' Mr Castelein noted in a statement. 'At the same time, there are challenges and uncertainties, particularly with respect to the future development of the pandemic.'
SeaNews Turkey
Despite business activity in Europe rising at the fastest rate in 21 years, along with accelerating new orders, the composite PMI survey for July found lengthening supply chains were slowing factory output, increasing order backlogs, and hitting business confidence.
Supplier delivery times to European manufacturers - a key barometer of supply chain delays - continued to lengthen at one of the sharpest rates ever recorded by the PMI survey, playing a key role in driving up input costs.
'Supply chain delays remain a major concern for manufacturing, constraining production and pushing firms' costs higher,' Chris Williamson, chief business economist at IHS Markit, said in his analysis of the July PMI.
'These higher costs have led to a near-record increase in average selling prices for goods and services, which is likely to feed through to higher consumer prices in coming months.'
However, European businesses were most concerned about the resurgence of the Covid-19 pandemic, with those surveyed expressing fears that the Delta variant posed 'a major risk' to the regional economic outlook.
'Not only have rising case numbers led to a slide in business optimism to the lowest since February, further Covid-19 waves around the world could lead to further global supply chain delays, and hence, ever-higher prices,' Mr Williamson noted.
A global shipper who asked not to be identified echoed that point, telling IHS Media: ' My message to our C-suite executives is that the biggest threat to the market in general over the next 12 months is going to be Covid-19 outbreaks at ports.'
Also overshadowing the robust demand is the continued impact of the pandemic, which was very much on the mind of Allard Castelein, CEO of the Port of Rotterdam Authority, when he announced his port's first-half performance this week.
'The economy is picking up, as is world trade,' Mr Castelein noted in a statement. 'At the same time, there are challenges and uncertainties, particularly with respect to the future development of the pandemic.'
SeaNews Turkey
