Latest data released by Markit - 2 August 2021
The preliminary report can be found here. This reaffirms a slight loss in momentum in euro area manufacturing activity last month but overall conditions are still robust.
The only issue remains on the side of supply chain disruptions, which is causing capacity and inflation constraints, and that is weighing on sentiment still. Keep an eye on this spot in the months ahead in case it impacts activity more persistently and strongly.
Markit notes that:
"The fact that growth of eurozone manufacturing cooled slightly in July after a record-breaking expansion during the second quarter should not itself be a major cause for concern. But the July survey also brought further signs that manufacturers and their suppliers are struggling to raise production fast enough to meet demand, driving prices ever higher.
"Although growth of demand has come off the boil slightly as the initial boost from the reopening of the economy fades, the July survey showed inflows of new orders outstripping production to an extent unprecedented in the survey's 24-year history.
"Capacity constraint indicators continue to flash red. Input shortages worsened again in July at a near record rate and July saw another near-record rise in backlogs of work.
"Safety stock building also remains widespread amid ongoing speculation about future supply difficulties. Mounting concerns about how the Delta variant poses further threats to supply chains and staff availability have helped push future growth expectations to the lowest so far this year.
"Prices pressures meanwhile show no sign of abating, with July seeing another record increase in both input costs and prices charged for goods as demand exceeds supply, and concerns over future supply availability flare up again."
