The Eurozone economy is falling the fastest since April 2013 barring pandemic lockdowns in October according to the latest S&P Global PMI™ data. Germany suffered the steepest economic contraction while growth in France merely stalled. Despite supply shortages showing further signs of easing, inflationary pressures remained elevated amid high energy costs and upward wage pressures. Manufacturing, and energy intensive sectors reported the steepest output loss. Services activity also continued to fall at an accelerating rate.
Europe and UK Manufacturing PMI October 2022
- Flash Eurozone PMI Composite Output Index at 47.1 (Sep: 48.1). 23-month low.
- Flash Eurozone Services PMI Activity Index at 48.2 (Sep: 48.8). 20-month low.
- Flash Eurozone Manufacturing Output Index at 44.2 (Sep: 46.3). 29-month low.
- Flash Eurozone Manufacturing PMI at 46.6 (Sep: 48.4). 29-month low.
- Data collected 11-20 October
The drop in new orders meant companies continued to rely on existing backlogs of work to help maintain business activity levels, causing backlogs of orders to fall for a fourth month in a row, led by a particularly sharp decline in manufacturing. The backlogs decline was most marked in Germany, whereas France reported rising outstanding business.
Manufacturing led the downturn, with factory output declining for a fifth month running and slumping at a rate not seen prior to the pandemic since July 2012.
Germany
- Flash Germany PMI Composite Output Index at 44.1 (Sep: 45.7). 29-month low.
- Flash Germany Services PMI Activity Index at 44.9 (Sep: 45.0). 29-month low.
- Flash Germany Manufacturing Output Index at 42.5 (Sep: 47.0). 29-month low.
- Flash Germany Manufacturing PMI at 45.7 (Sep:47.8). 28-month low.
Steepest decline continued to be recorded in Germany, composite PMI sank to 44.1, its lowest since May 2020 and, excluding the pandemic, its weakest since June 2009. Germany’s manufacturing and service sectors both reported steep and accelerated rates of contraction.
France
- Flash France PMI Composite Output Index at 50.0 (Sep: 51.2). 19-month low.
- Flash France Services PMI Activity Index at 51.3 (Sep: 52.9). 2-month low.
- Flash France Manufacturing Output Index at 44.2 (Sep: 43.3). 2-month high.
- Flash France Manufacturing PMI at 47.4 (Sep: 47.7). 29-month low.
Output meanwhile stalled in France, the composite PMI registering 50.0 from 51.2 in September, representing the first month in which output has failed to grow since March A modest expansion of service sector output offset a marked (albeit moderating) decline in manufacturing.
Rest of Europe
Elsewhere across the region, output fell for the second successive month, dropping at the fastest rate since January 2021, and excluding the pandemic since June modest decline in service sector output was
accompanied by a steeper fall in factory production.
Comments on Europe
Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“The eurozone economy looks set to contract in the fourth quarter given the steepening loss of output and deteriorating demand picture seen in October, adding to speculation that a recession is looking increasingly inevitable.
“While October’s headline flash PMI is consistent with GDP falling at a modest rate of around 0.2%, demand is falling sharply and companies are increasingly growing worried over high inventories and weaker than expected sales, especially as winter approaches. The risks are therefore tilted towards the downturn accelerating towards the year-end.
“While the rising cost of living remains the predominant cause of the economic slowdown, the region’s energy crisis remains a major concern and a drag on activity, especially in energy intensive sectors.
“Price pressures meanwhile remain stubbornly elevated, as rising energy and staff costs, and the weakened euro, offset any lowering of commodity prices linked to improving supply conditions. As such, the elevated survey price gauges will likely add the ECB’s resolve to tighten policy further in the coming months despite the growing recession risk. But there will likely also be some growing discomfort among some policymakers regarding the economic impact of tightening policy too aggressively in the face of other economic headwinds.”
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: S&P Global
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