Home >Politics >News >Delta variant, supply chain bottlenecks slow European economy

LONDON : Europe’s economy slowed in September as supply chain bottlenecks and worries over the Delta variant weighed on businesses across the continent, adding to signs the global economy is experiencing a soft patch amid an uneven recovery.

A gauge of business activity in the 19-nation eurozone recorded sharply slower growth in September in both manufacturing and services, extending a slowdown that began in August after activity in July hit a 21-year high, when widening vaccination campaigns allowed public health restrictions to be rolled back and economies to rev up.

Forecasting firm IHS Markit said its index of eurozone activity, drawn from surveys of purchasing managers, fell to a five-month low of 56.1 in September from 59 in August. The fall was steeper than predicted. Economists polled by The Wall Street Journal had expected a reading of 58.5. A reading over 50 indicates activity is expanding.

Still, the surveys point to faster growth in Europe than the region normally experienced before the pandemic, suggesting a solid if slowing recovery.

The Organization for Economic Cooperation and Development, a Paris-based research body, said this week that the Delta variant of coronavirus has slowed but not derailed the global recovery and that any growth lost this year will likely be recouped in 2022.

Thursday’s surveys show manufacturing activity slowed in Europe as supply chain disruptions and rising prices for raw materials hurt factory output and lengthened order backlogs. Factories world-wide have been beset by spiraling shipping costs, rocketing energy prices and component shortages as the global economy struggles to meet surging demand. Differences in vaccination levels between advanced and emerging economies are contributing to the squeeze, economists say, because some economies are under tighter restrictions than others.

Activity in the European services sector also slowed, IHS Markit said, as consumer nerves over Delta dented spending after a summer rebound. The slowdown was less marked than in manufacturing, however.

Activity in Germany slowed to a seven-month low and growth in France slowed to its weakest pace in five months, IHS Markit said.

Activity in the U.K., which isn’t in the eurozone and left the European Union Jan. 31 last year, also slowed in September. The slowdown was again led by manufacturing, IHS Markit said, as British companies were also hit by supply-chain disruptions.

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