European Economic Downturn Deepened in September Amidst Growing Gloom

European flash Manufacturing and Services PMI readings for September for the eurozone weakened while the U.K.’s Manufacturing PMI improved slightly but remained in contractionary territory according to the latest S&P Global PMI™ data. The eurozone saw output decline again. Soaring energy prices added further to companies’ cost burdens, and also limited production in some cases, pushing survey price gauges higher to indicate a renewed acceleration of inflationary pressures.

Europe Manufacturing Map

Europe and UK Manufacturing PMI September 2022 

  • Eurozone’s flash September Manufacturing PMI 48.5 (expected 48.7; last 49.6) and flash Services PMI 48.9 (expected 49.0; last 49.8)
  • Germany’s flash September Manufacturing PMI 48.3, as expected (last 49.1) and flash Services PMI 45.4 (expected 47.2; last 47.7)
  • U.K.’s flash September Manufacturing PMI 48.5 (expected 47.5; last 47.3) and flash Services PMI 49.2 (expected 50.0; last 50.9).
  • France’s flash September Manufacturing PMI 47.8 (expected 49.8; last 50.6) and flash Services PMI 53.0 (expected 50.5; last 51.2)

Comments on Europe

Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“A eurozone recession is on the cards as companies report worsening business conditions and intensifying price pressures linked to soaring energy costs.

“The early PMI readings indicate an economic contraction of 0.1% in the third quarter, with the rate of decline having accelerated through the three months to September to signal the worst economic performance since 2013, excluding pandemic lockdown months.

“Germany is facing the toughest conditions, with the economy deteriorating at a rate not seen outside of the pandemic since the global financial crisis.

“With demand slumping and companies growing increasingly pessimistic about the outlook, the survey’s forward-looking indicators point to a steepening economic decline for the eurozone in the fourth quarter, adding to the likelihood of the region falling into recession.

“Although there were some signs of supply chain constraints easing, the focus of concern has clearly shifted away from supply chains to energy and the rising cost of living, which is not only hitting demand but also limiting manufacturing production and service sector activity in some cases.

“The surge in energy costs has meanwhile reignited inflationary pressures which, having shown some signs of cooling in prior months amid easing supply shortages, have reaccelerated.

“The challenge facing policymakers of taming inflation while avoiding a hard landing for the economy is therefore becoming increasingly difficult.”

About the Report

The Global Report on Manufacturing is compiled by IHS Markit based on the results of surveys covering over 13,500 purchasing executives in over 40 countries. Together these countries account for an estimated 98% of global manufacturing output2 . Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.

Source: IHS Markit Procure

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