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From chips to drivers, euro zone firms warn supply is tight: ECB

From chips to drivers, euro zone firms warn supply is tight ECB

FRANKFURT (Reuters) – Euro zone manufacturers cannot get enough computer chips and other key inputs to keep up with growing demands, resulting in lower economic activity and higher prices, the European Central Bank said on Friday.

After talking to 66 leading companies which operate in the euro zone, the ECB reported that manufacturers were lamenting scarce supply as a result of a faster-than-expected rebound in industrial activity and a shortage of shipping containers.

It added the most acute shortage was of semiconductors, followed by metals, chemicals, plastics and related components.

“As a result, many firms’ activity was stable or contracting despite strong growth in order books or indications of substantial latent demand,” the ECB said.

It added selling prices were rising in much of the manufacturing sector as input increased and customers tended to focus more on securing supply than on negotiating prices.

“Many contacts thus anticipated some higher-than-usual consumer goods inflation this year,” the ECB said “This was, however, expected to be transitory.”

Activity in the services sector remained subdued due to ongoing, pandemic-related curbs, with the exception of food retailers, who were even struggling to find enough people to deliver their goods.

“Food retailers and their suppliers continued to benefit from stronger-than-normal demand, although a lack of available drivers limited their ability to meet the increased demand for home deliveries, the ECB said.

Overall, companies anticipated growth in the second quarter, but continuing restrictions and the slow roll-out of vaccines pushed expectations of a more substantial rebound to later in the year, the ECB said.

(Reporting By Francesco Canepa; Editing by Balazs Koranyi)

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