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Eurozone industry contracts in August, PMI shows

Eurozone industrial activity shrank for a second month in August, according to a survey that showed weak demand made it impossible for factories to sell their output and so they built up finished goods inventories at a record pace.

As in many other parts of the world, Europe is facing a cost-of-living crisis, and in the face of rising energy and food bills, many consumers are reining in their spending.

S&P Global’s final industry Purchasing Managers’ Index (PMI) dropped to 49.6 in August from 49.8 in July, down from a preliminary reading of 49.7 and the 50 mark that separates growth from contraction.

The sub-index measuring production hit 46.5 out of 46.3 but marked its third month of readings below 50.

“Eurozone manufacturers reported yet another sharp drop in production in August, meaning production has fallen for three straight months and increases the likelihood of GDP falling in the third quarter,” said Chris Williamson, chief business economist. from S&P Global.

The new orders sub-index remained well below the break-even mark, raw material inventories increased again, work backlogs were reduced and finished goods inventories increased at a record pace.

The finished goods inventories sub-index rose to 53.3 from 52.5, the highest level since the survey began in mid-1997.

Source: CNN Brasil

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