The headline reading is the lowest in 14 months with manufacturing output also slumping to its weakest in 21 months. The Russia-Ukraine war was a noticeable drag as it weighed on demand conditions and also business confidence. Meanwhile, input price inflation accelerated to a four-month high amid surging commodity, fuel and energy costs. That saw euro area manufacturers raise their charges to the greatest extent in the series’ history. S&P Global notes that:
“Just as the fading of the latest pandemic wave was creating a tailwind for the eurozone manufacturing recovery, with economies re-opening and supply chain bottlenecks easing, the war In Ukraine has created an ominous new headwind.
“While the boost to demand from the further relaxation of COVID-19 containment measures helped ensure a sustained expansion of manufacturing order books and output in March, rates of growth have cooled markedly amid sanctions, soaring energy costs and new supply constraints linked to the war. Heightened risk aversion among both manufacturers and their customers due to the uncertainty caused by the invasion, combined with an Intensifying cost of living crisis, meanwhile threatens to pull growth even lower in the coming months, as reflected in the slumping of manufacturers’ growth expectations for the coming year.
“Business optimism in the goods producing sector has collapsed to a level indicative of manufacturing output declining in the second quarter and adding to the risk of the manufacturing sector sliding into a new recession.”