Eurozone's manufacturing PMI dips further to 43.1 in Oct 2023

Of the countries where manufacturing PMI data are available, October survey data highlighted broad-based weakness. As has been the case so far in the second half of the year, Germany was the worst performer, despite its downturn easing again, according to the Hamburg Commercial Bank (HCOB) eurozone manufacturing PMI, compiled by S&P Global.

France, the second-largest economy in the single currency union, recorded its strongest deterioration in factory conditions in nearly three-and-a-half years. Faster declines were also noted for Italy, Spain, and Ireland, while Greece remained the sole country to register an improvement, albeit one which was marginal.

PMI survey data continued to highlight considerable weakness in demand, with new orders contracting at one of the steepest rates in the survey history. The latest decrease has only ever been surpassed by those seen during the pandemic, the global financial crisis of 2008-09 and the energy crisis late last year. Similar trends were also evident for both quantity of purchases and backlogs of work, highlighting the bleak picture within the eurozone manufacturing industry.

A rapid and accelerated fall in pending workloads signalled companies’ efforts to support production, given substantial weakness in demand. Nevertheless, factory production volumes fell markedly once again and at the joint-second strongest pace since May 2020. In line with the trend seen for much of the year-to-date, eurozone manufacturers reduced their stocks of purchases in October.

Notably, the rate of depletion quickened for the second successive month and was the strongest since November 2012. Postproduction inventories also fell, with October’s decline the most marked in over two years.

Alongside the cashflow improvements made via inventory depletion, eurozone factories looked to make additional cost savings through jobs cuts. Employment fell for a fifth month in a row at the start of the fourth quarter, with the rate of job shedding its fastest since August 2020.

An accelerated decrease in staffing numbers also came amid a worsening in firms’ growth expectations. Although firms remained marginally optimistic towards the 12-month outlook, the level of positive sentiment slid to an 11-month low.

Meanwhile, deflation remained a key feature of the Manufacturing PMI survey in October as both input costs and output prices continued to fall. The extent to which operating expenses fell was the weakest since April, but sharp nevertheless. A sustained fall in input prices partially reflected further improvements on the supply side as average input lead times continued to improve. Survey respondents continued to pass through cost savings to clients via a reduction in prices charged, the sixth month running in which this has been the case.

Fibre2Fashion News Desk (NB)