Manufacturing activity across the Eurozone declined to the lowest level since the Covid-19 pandemic, amid weakening global demand for goods, according to a study by S&P Global.
The report shows that the Purchasing Managers’ Index (PMI) for manufacturing dropped to 46.4 in October from September’s 48.4. The figure is below the preliminary reading of 46.6 and the 50-mark separating growth from contraction.
The index also sank to 37.9 from 41.3 in September, as geopolitical uncertainty, high inflation, and weaker economic conditions around the world are putting a dent in people’s spending.
Commenting on the data, senior economist at S&P Global Market Intelligence Joe Hayes said: “The Eurozone goods-producing sector moved into a deeper decline at the start of the fourth quarter. The PMI surveys are now clearly signaling that the manufacturing economy is in a recession.”
He elaborated that “In October, new orders fell at a rate we’ve rarely seen during 25 years of data collection – only during the worst months of the pandemic and in the height of the global financial crisis between 2008 and 2009 have decreases been stronger.”
According to Hayes, developments in the energy markets will remain a key focus for euro area manufacturers through the winter.
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“The spate of mild weather across Europe so far bodes well and has helped bring wholesale gas prices down. However, we remain mindful of the risk that atypical cold weather could ramp up the need for energy rationing, causing widespread disruption to manufacturing production,” he said.
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