LONDON/TOKYO, Oct 3 (Reuters) – Global factory output mostly weakened in September as slowing demand added to the pain from persistent cost pressures and tighter monetary policy, surveys showed on Monday, diminishing economic recovery prospects.
The data clouds the outlook for a sustained recovery from the COVID-19 pandemic and could add to concerns of a global slowdown as major central banks embark on the most aggressive round of interest rate rises in decades to tame soaring inflation.
Those hikes have stoked fears of a sharp downturn in global demand that had underpinned exports.
Manufacturing activity across the euro zone declined further last month as a growing cost of living crisis kept consumers wary while soaring energy bills limited production.
S&P Global’s final manufacturing Purchasing Managers’ Index (PMI) for the bloc fell to a 27-month low of 48.4 in September from August’s 49.6, further below the 50 mark separating growth from contraction.
“The European manufacturing sector continues to face serious challenges, weighed down by surging energy prices, while new orders are seeing further decline,” said Thomas Rinn, global industrial lead at Accenture.
“Economies continue to face drawbacks from high inflation, growing uncertainties and the increasing cost-of-living crisis.”
Soaring energy costs set off alarm bells about the outlook for business in Germany, Europe’s largest economy, as manufacturing activity contracted there for a third month. French factory activity contracted at the fastest pace since May 2020.