Eurozone, UK under ‘recessionary conditions’ as winter storm gathers pace – ICIS economist

MADRID (ICIS)–Economic indicators in the eurozone and the UK are worsening as domestic and overseas demand is weakening, suggestive of “recessionary conditions” for the months ahead, an economist at ICIS said on Thursday.

Kevin Swift, senior economist for global chemicals at ICIS, said the European manufacturing sectors are facing several headwinds in coming months as energy costs rise while supply chain woes and shortages of labour remain.

Earlier on Thursday, the PMI manufacturing indices for the eurozone and the UK showed they contracted in August.

In Asia, China’s manufacturing PMI also showed a contraction for August, while Japan’s expanded.

A positive in both the 19-country eurozone and the UK in August was an easing of input costs for manufacturers, as well as a slowdown in selling prices.

However, they remain at multi-decade highs.

“[In the UK] Production suffered its steepest contraction since May 2020. Input costs and selling price inflation eased further, but is still elevated … [In the eurozone there is] Weak demand as inflation erodes purchasing power and weakened demand overseas,” said Swift.

“Headwinds to European manufacturing are many as the sector struggles under the weight of rising energy costs, supply chain bottlenecks, and shortages of labour. That both the UK and the eurozone are negative are suggestive of recessionary conditions.”