Euro zone manufacturing down, recession fears grow

STORY: Manufacturing activity contracted across the euro zone last month.

That's according to a closely watched survey released on Monday (August 1).

S&P Global's final manufacturing Purchasing Managers' Index fell to 49.8 in July - down from June's 52.1.

It's the first time the PMI has gone below 50 since June 2020 - anything below that figure represents a contraction.

S&P said Euro zone manufacturing faces an increasingly steep downturn - and it all adds to the risk of recession in the region.

It blamed lower than expected sales, which had forced factories to stockpile unsold goods.

S&P said it saw the largest rise in unsold stocks of finished goods ever recorded by the survey.

The new orders index fell to 42.6 from 45.2 - the lowest since May 2020 when the health crisis had led to lockdowns worldwide.

Production was falling in all countries surveyed other than the Netherlands.

S&P said the rate of decline was a particular worry in the bloc's three biggest economies, France, Germany and Italy.

The euro zone's numbers follow the U.S. economy contracting unexpectedly last quarter - stoking fears it was on the brink of recession.

There was some light for the euro zone, though.

An early reading showed Friday (July 29) that its economy grew faster than expected last quarter.

But a July Reuters reading still gave a 45% chance of a recession within a year.

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