Europe: European economic activity declined in August for the second month in a row; a survey revealed Tuesday showed amid rising inflation due to the war in Ukraine.
The S&P Eurozone Purchasing Managers’ Index fell to an 18-month low as rising prices hit demand for services and manufacturing supplies.
The Purchasing Managers’ Index fell from 49.9 in July to 49.2 in August. A drop in the index below 50 points represents a contraction in business activity.
The index fell below 50 in July after 16 months of growth, as inflation caused by high energy prices and supply chain crises destabilized the global economy.
Manufacturing declined last month, but the downturn has now also spread to services, including tourism, causing some European economies to falter.
“Cost-living pressures mean that the recovery in the services sector after the lifting of Covid-19 restrictions has subsided,” said Andrew Harker of S&P Global Market Intelligence.
“The decline in production is being observed across a range of sectors, from basic materials and auto companies to tourism and real estate companies as economic weakness becomes more extensive,” he added. He warned that employers are also rehiring people they had laid off during the Covid-19 pandemic at a slower pace.