‘Worse to come’ for European factories

MANUFACTURERS across Britain and Europe are in a rut as a global trade war and Brexit uncertainty take their toll.

An IHS Markit report showed the sector has shrunk for five months in a row and is shedding jobs.

The five-month losing streak, from May to September, is the longest decline since mid-2009 during the last recession.

Activity in the eurozone is at its weakest for seven years, with the downturn led by Germany where September was the worst month for factories since June 2009.

There were also declines in the Republic of Ireland, Italy, Spain and Austria last month while French manufacturing barely grew.

Chris Williamson at Markit said: ‘The health of the eurozone manufacturing sector went from bad to worse in September.

‘Germany is leading the downturn, but Italy and Spain are also deepening, whilst France’s manufacturing sector has stalled.

‘There’s likely worse to come. Business remains downbeat about the year ahead, with optimism at a seven-year low amid trade war worries, signs of slowing global economic growth and geopolitical concerns, including anxiety over a disruptive Brexit.’

Markit said its index of eurozone activity, where below 50 shows decline, fell to 45.7 in September, its lowest since October 2012.

Germany’s score of 41.7 was the lowest of any country in the single currency bloc, a sign the country’s manufacturers are struggling.

In the UK, the index nudged up from August’s six-and-a-half-year low of 47.4 to just 48.3.

Markit director Rob Dobson said: ‘The UK manufacturing downturn continued in September, adding to signs that the sector may be sliding into recession. Output, new orders and employment all fell further as rising political, trade and economic uncertainties exacerbated concerns about Brexit.’