Manufacturing growth is slowing from Asia to Europe as China’s COVID-19 tariffs and Russia’s invasion of Ukraine disrupt supply chains, while the growing risk of a US recession poses a new threat to the global economy.
Due to high eurozone prices, demand for manufactured goods fell at the fastest rate since May 2020, when the coronavirus pandemic was in full swing, with S&P Global’s headline factory Purchasing Managers’ Index (PMI) falling to a near two-year low of 52.0 from 54.6.
A Reuters poll predicted a more modest drop to 53.9, and the index moved closer to the 50-point threshold that separates growth from contraction.
‘June’s eurozone PMI surveys revealed a further slowdown in the services sector, while output in the manufacturing sector now appears to be falling outright,’ said Capital Economics’ Jack Allen-Reynolds.
‘With price indices remaining extremely high, the eurozone appears to have entered a stagflationary period.’
According to economists polled by Reuters earlier on Thursday, the EU faces a one-in-three chance of experiencing a recession within the next 12 months. They also stated that inflation, which reached a record high of 8.1 percent last month, had yet to peak.
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