<ul><li>Prior 47.1</li></ul><p style=““ class=“text-align-justify“>The downturn in the euro area manufacturing sector eases towards the end of last year, as supply conditions stabilise and inflation pressures cool off. That at least points to some hope that any recession will be less pronounced than feared but it is still too early to call this any sort of turning point for Europe’s economic prospects. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“A second successive monthly cooling in the rate of loss of factory output brings some cheer for the beleaguered manufacturing sector as we start the new year. The number of optimists regarding the year ahead has also now exceeded pessimists for the first time since August, hinting at a steady improvement in business confidence. </p><p style=““ class=“text-align-justify“>“Prospects have brightened amid signs of healing supply chains and a marked softening of inflationary pressures, as well as a calming of concerns over the region’s energy crisis, thanks in part to government assistance. Hence the supply chain and <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_2″ class=“terms__main-term“>inflation</a> headwinds facing businesses have moderated from the heightened state of alarm seen in the autumn. </p><p style=““ class=“text-align-justify“>“The brighter news is tempered, however, by the ongoing weakness of demand, with inflows of new orders continuing to fall at a far faster rate than companies are reducing output, suggesting that manufacturers will have to cut production sharply further in coming months unless demand revives soon. With the global economic backdrop darkening and eurozone interest rates rising again in December, risks to the demand outlook remain skewed to the downside. </p><p style=““ class=“text-align-justify“>“As for the year ahead, in addition to watching for potential fiscal and monetary policy changes, high on the list of issues for manufacturers to watch as we head into 2023 will be the impact on supply chains and commodity prices from the changing response to COVID-19 in China, as well as the possibility of sharply changing energy prices amid the changing geopolitical situation, with the Ukraine-Russia war remaining the key threat to stability in the region.”</p>

This article was written by Justin Low at www.forexlive.com.