Eurozone manufacturing sector contracts again in August

By Aysu Bicer

ANKARA (AA) - The eurozone manufacturing Purchasing Managers Index (PMI) fell to 49.6 in August from 49.8 in July, a London-based global data company said on Thursday.

"This was the lowest reading since June 2020 and signalled a second successive deterioration in manufacturing operating conditions," S&P Global said.

Output diminished at a similar pace to that seen in July, which was the strongest since May 2020, while new orders diminished remarkably once again.

Weak demand conditions were a major drag on goods producers in August, reflecting deteriorating purchasing power across Europe amid rising inflation.

"The euro area’s beleaguered manufacturers reported a further steep drop in production in August, meaning output has now fallen for three successive months to add to the likelihood of GDP falling in the third quarter," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Forwardlooking indicators suggest that the downturn is likely to intensify – potentially markedly – in coming months, meaning recession risks have risen," he added.

According to him, falling sales have not only caused increasing numbers of factories to cut production, but have also meant warehouses are filling with unsold stock to a degree unprecedented in the survey’s 25-year history.

"Weak demand and efforts to reduce high inventory levels are therefore combining to drive production lower in the months ahead," he said.