A new study by S&P Global shows that the weakening global demand for products has crushed Eurozone manufacturing to the lowest levels seen since the Covid-19 pandemic.

In October the European Purchasing Managers’ Index for manufacturing fell to 46.4, a significant drop from September’s 48.4, according to the report. On the scale a reading of 50 is the boundary between contraction and expansion, with any reading over 50 representing an expansion of production, and any reading under 50 reflecting a contraction.

Overall the Index fell from 41.3 in September to 37.9, as consumer spending was pummeled by a mixture of geopolitical uncertainty, high inflation, and weaker economic conditions around the world.

Joe Hayes, the senior economist at S&P Global Market Intelligence said, “The Eurozone goods-producing sector moved into a deeper decline at the start of the fourth quarter. The PMI surveys are now clearly signaling that the manufacturing economy is in a recession.”

He went on to say, “In October, new orders fell at a rate we’ve rarely seen during 25 years of data collection – only during the worst months of the pandemic and in the height of the global financial crisis between 2008 and 2009 have decreases been stronger.”

Hayes also said that he felt that developments in the energy crisis were going to be key factors affecting Eurozone manufacturers throughout the winter, both by affecting consumer spending and purchasing, as well as affecting production costs and overhead.

He added, “The spate of mild weather across Europe so far bodes well and has helped bring wholesale gas prices down. However, we remain mindful of the risk that atypical cold weather could ramp up the need for energy rationing, causing widespread disruption to manufacturing production.”