A survey showed on Monday that manufacturing activity across the euro zone fell further last month as a deepening cost-of-living crisis kept consumers wary while rising energy bills curbed production.
The final reading of the S&P Global Manufacturing Purchasing Managers’ Index fell to a 27-month low of 48.4 in September from 49.6 in August, just below the initial reading of 48.5 and below the 50 mark that separates growth from contraction.
An index measuring production, which feeds into the composite PMI due for release on Wednesday and seen as good evidence of economic resilience, fell to 46.3 from 46.5, marking its fourth month of readings below 50.
“The ugly combination of sluggish manufacturing and rising inflationary pressures will heighten concerns about the outlook for the eurozone economy,” said Chris Williamson, chief business economist at Standard & Poor’s Global.
“Except for the initial shutdowns caused by the pandemic, manufacturers in the eurozone have not seen a collapse in demand and production on this scale since the height of the global financial crisis in early 2009.”
A Archyde.com poll last month found there was a 60% chance of a recession in the bloc within a year.
Demand fell at the fastest rate since the time the Corona virus swept the world, and accumulated orders decreased while stocks of unsold finished products increased as factories raised prices to meet the rising costs.
This means optimism has diminished, and the future production index, which assesses purchasing managers’ expectations for the next year, fell rapidly, as the index fell to 45.3 from 52.7, the lowest reading since May 2020.