Producers in the UK and Europe have suffered another month of decline as demand falls and costs rise.
As fears of a global recession intensified, financial information group S&P Global said UK industrial production fell for the third month in a row in September.
At the same time, the recession in the eurozone deepened, with factories in Germany and France experiencing their worst months since the first wave of the Covid-19 pandemic in early 2020.
Slowdown: As fears of a global recession mount, financial information group S&P Global said UK factory production fell for the third month in a row in September.
Chris Williamson, chief business economist at S&P Global, said: “The ugly combination of a manufacturing recession and rising inflationary pressures will heighten concerns about the outlook for the eurozone economy.”
S&P Global said its UK manufacturing index, where readings below 50 indicate a decline, hit 48.4 in September.
Although this was stronger than the 47.3 recorded in August, it was the third consecutive month.
Factories are “cutting production in response to lower new orders,” the report said, and exports have been hurt by lower demand from the US, China and the EU. Manufacturers have also noticed that their costs have risen and have responded by raising prices at the factory gate.
John Glen, chief economist at the Chartered Institute of Purchasing and Supply, which wrote the report jointly with S&P Global, said: “Manufacturers continued to feel the autumn chill in September as lower sales, higher costs and a depressed market pushed the sector into crisis. reduction for the third month in a row.
The eurozone manufacturing index also stood at 48.4, the worst reading in 27 months. France and Germany scored the lowest at 47.7 and 47.8 respectively, while Ireland was the only eurozone country in the report to see growth.
The report heightened fears of a harsh winter for the UK and eurozone economies as central banks raise interest rates to fight runaway inflation.
Williamson said: “With the exception of initial restrictions due to the pandemic, eurozone producers have not seen a collapse in demand and production on this scale since the height of the global financial crisis in early 2009.
The downturn is driven primarily by the rising cost of living, which reduces purchasing power and hurts demand, but soaring energy prices are also increasingly restricting production.
“A worse outlook is expected as orders are falling much faster than production is being cut.
“It appears that further sharp declines in production are expected in the coming months if demand does not recover.”
Credit: www.thisismoney.co.uk /