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Manufacturing slump stokes recession fears

Slowdown: As fears of a global recession mounted, financial reporting group S&P Global said factory output in the UK fell for the third consecutive month in September

Manufacturing slump stokes recession fears: UK output falls for third straight month as demand wanes and costs soar

Manufacturers in Britain and Europe suffered another month of decline as demand wanes and costs soar.

As fears of a global recession mounted, financial reporting group S&P Global said factory output in the UK fell for the third consecutive month in September.

At the same time, the recession in the eurozone has deepened, with factories in Germany and France going through their worst months since the first wave of the Covid-19 pandemic in early 2020.

Slowdown: As fears of a global recession mounted, financial reporting group S&P Global said factory output in the UK fell for the third consecutive month in September

Slowdown: As fears of a global recession mounted, financial reporting group S&P Global said factory output in the UK fell for the third consecutive month in September

Chris Williamson, chief economist at S&P Global, said: “The ugly combination of a shrinking manufacturing sector and mounting inflationary pressures will add to concerns about the outlook for the eurozone economy.”

S&P Global said its manufacturing index for the UK – where scores below 50 show a decline – reached 48.4 in September.

Although this was stronger than the 47.3 recorded in August, it was the third consecutive month of contraction.

The report said factories are “reducing production in response to lower new orders” as exports were hit by lower demand from the United States, China and the EU. Manufacturers have also seen their costs rise – and have raised factory gate prices in response.

John Glen, chief economist at the Chartered Institute of Procurement and Supply, which compiled the report with S&P Global, said: “Manufacturing companies continued to feel an autumnal chill in September as falling sales, rising Costs and a depressed market dragged the sector down into contraction for a third straight month.

The eurozone manufacturing index also came in at 48.4, its worst performance in 27 months. France and Germany recorded the lowest scores, at 47.7 and 47.8 respectively, while Ireland was the only eurozone country in the report to see growth.

The report fueled fears of a dark winter for the UK and eurozone economies as central banks hike interest rates to tackle runaway inflation.

Williamson said: “Excluding the initial pandemic lockdowns, eurozone manufacturers have not seen a collapse in demand and production on this scale since the height of the global financial crisis in early 2009. .

The slowdown is mainly due to the soaring cost of living, which is reducing purchasing power and hitting demand, but soaring energy prices are also increasingly limiting production.

“The worst seems to come, with orders collapsing at a significantly faster rate than the reduction in production.

“Further significant production cuts appear to be on the cards in the coming months unless demand picks up.”

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