Manufacturing in Germany and the U.K. declined in May, choked by record commodity prices and slowing economic growth across Europe.
German production, adjusted for seasonal swings and inflation, dropped 2.4 percent from April, the biggest decline since February 1999, the Economy Ministry in Berlin said today. The index of U.K. manufacturing production unexpectedly fell to the lowest since September, slipping 0.5 percent on the month.
The global slowdown is rippling through Europe's economy as inflation accelerates and higher credit costs drag down house prices in parts of the region. The U.K., Spain and Ireland are close to recessions and evidence is mounting that Germany, an engine of European growth since financial markets seized up last year, is also starting to slow.
``The writing had been on the wall for the U.K. for a while and now the combination of tighter lending conditions and high inflation is bringing the rest of Europe down with it,'' said James Nixon, an economist at Societe Generale SA in London. ``We're heading for a sharp slowdown.''
Whilst enquiries levels are high (companies searching for lower prices), order bookings for steel strip are low. Furthermore users are looking for short lead times as they reduce inventory due to cost pressures. The huge increases in steel prices this year are starting to have a major impact on activity levels.
full story at Bloomberg.com: Worldwide