Euro zone industrial activity contracted further last month as the cost-of-living crisis made consumers wary, while rising energy bills limited output, a survey showed on Monday.
The S&P Global Purchasing Managers Index (PMI) fell to a 27-month low of 48.4 in September from 49.6 in August. The result was below the preliminary reading of 48.5 and the 50 mark that separates growth from contraction.
The production sub-index slipped to 46.3 from 46.5, marking the fourth month reading below 50.
“The ugly combination of a recessionary manufacturing sector and mounting inflationary pressures will further heighten concerns about the outlook for the eurozone economy,” said Chris Williamson, chief business economist at S&P Global.
“Excluding the initial lockdowns caused by the pandemic, eurozone manufacturers have not seen a collapse in demand and production on this scale since the height of the global financial crisis in early 2009.”
Demand has fallen at the fastest pace since the time the coronavirus pandemic was spreading around the world and inventories of unsold finished goods swelled as factories raised prices to meet rising costs.
That means optimism has waned and the futures production index, which measures purchasing managers’ 12-month outlook, has gone into rapid decline. It dropped from 52.7 to 45.3, its lowest reading since May 2020.
“The combination of rising costs and falling demand also caused companies’ expectations for the coming year to drop sharply again in September, leading, in turn, to reduced purchases of inputs and lower job growth at the time. as companies prepare for a harsh winter,” Williamson said.
(Reporting by Jonathan Cable)
Source: CNN Brasil
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