Teresa Ribera Rodriguez, responsible for the energy transition at the European Commission, the EU’s executive body, speaks to the press in Belgium on Wednesday. Thierry Monasse/Getty Images
The conflict in the Middle East resulted in the first decline in European business output in 16 months during April and triggered a spike in prices, according to key survey data released today.
The most recent Purchasing Managers’ Index for the 21 nations using the euro, derived from surveys conducted with executives in both manufacturing and service industries, comes after Wednesday’s declaration of emergency strategies intended in the larger European Union to soften the economy against rising energy costs.
“The eurozone is experiencing escalating economic issues due to the conflict in the Middle East,” stated Chris Williamson, a senior economist at S&P Global, which gathers the PMI data. “The dispute has caused the economy to fall in April, while simultaneously increasing inflation significantly.”
Looking forward, more prevalent “supply shortages” pose a risk of further hindering economic growth and raising prices even more, he remarked, highlighting that April’s PMI data showed a 0.1% decrease in the eurozone’s gross domestic product during the second quarter.
“The war is presently affecting the service sector the most, where business activity is declining at a pace not experienced since the pandemic restrictions of early 2021,” said Williamson.
PMI data for the United Kingdom presented a more varied scenario. Private sector production increased more rapidly this month, yet input cost inflation surged significantly.
“The enhanced pace of growth is partially a result of a temporary surge in buying as people try to make purchases before anticipated price increases and supply shortages related to the conflict,” Williamson stated in the UK report.
The conflict has diminished job opportunities and lowered business confidence, which could negatively affect economic growth in the upcoming months, he stated.
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