Industrial crisis Europe’s activity contracts in September and anticipates new falls

Eurozone activity contracted in September for the third consecutive month and more intensely than in previous months, which, together with the deterioration of the indicators of orders and expectationspoints to greater decreases in activity in the future.

The PMI index of the activity in the euro zone of S&P Global, which now integrates IHS Markit, published this Friday stood at 48.2 points, seven tenths less than in August and again below the 50 points that separate the growth of the contraction.

September’s contraction was the fastest since January 2021 and has been driven by the industrial sector, which in its fourth consecutive month of decline in activity has marked the fastest shrinkage since May 2020.

Activity in the services sector also fell for the second consecutive month, weighed down by the decline in travel, tourism, leisure, real estate services and insurance.

Economic activity in Germany registered in September the lowest level since May 2020, while France maintained a slight increase thanks to services.

Orders for services and products are sharply reduced

As far as the indicators of the futurenew orders for products and services fell “sharply”, especially in the manufacturing sector, which points to “a further acceleration of the decline in total activity in October”.

Despite lower orders and of the reduction of the orders to be fulfilled, which point to an excess of capacity with respect to the demand, employment remained unchanged.

In September, European companies have reported relief from component shortages and improved logistics despite the lack of components and energy markets still restricting production capacity.

In parallel, costs recorded the biggest increase since June due to energy inflation and the increase in the prices paid, which could not be offset by the better situation in the supply of raw materials. Prices charged rose at the fastest pace since June.

As for expectations, entrepreneurs were pessimistic about their activity for the next twelve months, with confidence at its lowest since May 2020which falls especially significantly in Germany.

This pessimism is mainly based on concerns about energy prices, the effect of inflation on demand, rising interest rates, the war in Ukraine and problems in the supply chain.


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