The downturn in manufacturing activity in the Eurozone fell deeper into contraction territory in September, according to a survey released on Monday, as demand tumbles further and price pressures intensify.
S&P Global’s final manufacturing Purchasing Managers’ Index (PMI) fell to a 27-month low of 48.4 in September, down from 49.6 in August, just below a preliminary reading of 48.5 and below the 50-point threshold separating growth from contraction.
This figure indicated a worsening of operating conditions for Eurozone goods producers.
“The ugly combination of a manufacturing sector in recession and rising inflationary pressures will add further to concerns about the outlook for the Eurozone economy,” said Chris Williamson, chief business economist at S&P Global.
“Excluding the initial pandemic lockdowns, Eurozone manufacturers have not seen a collapse of demand and production on this scale since the height of the global financial crisis in early 2009.”
High inflation and economic uncertainty reportedly dampened consumer demand for Eurozone goods in September. S&P Global noted that as business confidence plummeted to its lowest point since May 2020, companies began cutting back on spending in preparation for more challenging conditions.
The two largest economies in the Eurozone, France and Germany, saw the worst decline in manufacturing at the end of the third quarter, with PMIs falling to their lowest levels since the first wave of the Covid-19 pandemic in early 2020.