Germany reports steepest decline in bloc as higher energy prices weigh on demand
Green shift: business investment spending is expected to be under pressure in all areas apart from the energy transition
A closely watched survey of eurozone companies in October 2022 has added to fears of an impending recession and slump in investment, as the German economy led the fastest contraction in business activity in almost two years.
S&P Global’s flash eurozone composite purchasing managers’ index (PMI), a key barometer for the health of the manufacturing and services sectors, stood at 47.1 in October, down from 48.1 in September. A score below 50 indicates that the majority of surveyed businesses reported a contraction in activity from the previous month.
“Companies are nervous about the economic outlook, margins are under pressure and borrowing costs have risen,” said Chris Williamson, the chief business economist at S&P Global Market Intelligence, adding that this is making them “more cautious” about investment spending. He noted that the most prominent pressure on investment were currently in the chemicals, plastics and basic resources sectors.
Manufacturers have been particularly hard hit by current conditions and led the overall downturn, as factory output in October fell for the fifth consecutive month amid higher energy costs following Russia’s invasion of Ukraine. Meanwhile, the eurozone services sector experienced a contraction for the third month running.