(Bloomberg) -- European new car sales grew for a second month in September on easing supply-chain woes while a worsening economic outlook points to tougher times ahead.

Automakers in the EU, European Free Trade Area and UK delivered a combined 1.05 million vehicles last month, up 7.9% from a year ago, the European Automobile Manufacturers’ Association said Tuesday. The increase builds on results from August, when the industry reported its first gains in more than a year. 

Even as deliveries rise, sales remain far below 2019 levels, the year before the pandemic, as carmakers continue to battle a range of issues from chip shortages to the energy crisis. Supply-chain problems are easing, but runaway inflation and a worsening economic outlook are threatening to derail a recovery.

Economic output in the Euro bloc will drop by 0.1% in 2023, according to economists polled by Bloomberg who a month ago still predicted 0.3% growth. Germany, the area’s largest economy, is seen contracting by 0.5% while France, Italy and Spain are expected to expand. 

The European Central Bank, which had been accused of acting too sluggishly to counter record euro-zone inflation, took an unprecedented monetary-tightening step last month, raising interest rates by 75 basis points on the back of a 50 point rise in July. The ECB said then it expected more hikes to follow as it seeks to “dampen demand.”

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