Record prices for inputs, rising wages in Europe fuel inflation: survey – POLITICO

April was the largest euro-zone price hike ever recorded by a leading business survey.

The S&P Global monthly opinion poll of businesses, the PMI index, reported record jumps in goods and services on Friday. The price rise was driven by a rise in input costs – the second highest since the series began in 1998 and the highest ever recorded in Germany – including for energy and wages, suggesting an ongoing inflationary trend.

“Average prices for goods and services rose at an unprecedented rate in April as these higher costs were passed on to consumers, sending a worrying signal that inflationary pressures are still mounting,” wrote Chris Williamson, chief economist at S&P Global.

On a positive note, economic activity in the euro zone rebounded in April, buoyed by an increase in leisure activities and travel. But production came close to a halt due to supply chain disruptions and high prices.

The Flash Eurozone PMI Composite Output Index, a measure of economic activity across all sectors, hit a seven-month high at 55.8, while the Flash Eurozone Manufacturing PMI hit a 15-month low at 55.3.

Across the eurozone, Germany saw the biggest slump in growth, hitting a three-month low as the first contraction in manufacturing output since June 2020 offset growth in services. Meanwhile, France posted its fastest growth since January 2018, mainly driven by a surge in services.

“The eurozone therefore started the second quarter stronger than expected, beating consensus expectations of a slowdown,” Williamson wrote. “However, the weakness of the manufacturing sector is causing great concern.”