Jan eurozone production growth lacks vigour; new orders drop since Dec

The Hamburg Commercial Bank (HCOB) eurozone manufacturing purchasing managers’ index (PMI), a measure of the overall health of the eurozone manufacturing sector compiled by S&P Global, remained inside contraction territory at 49.5 in January, marking the third successive month in which the headline index has posted below the crucial 50 no-change threshold.

Meanwhile, job losses were extended and firms reduced their buying quantities, although the downturn in purchasing volumes was only marginal.

Business confidence rose to its highest level in the month since February 2022.

Elsewhere, pricing power appeared to be limited amongst eurozone manufacturers, with charges broadly unchanged on the month despite input cost inflation accelerating to a three-year high. This was up from December’s nine-month low of 48.8, however, and indicative of a deterioration that was only marginal overall, a S&P Global release said.

The sub-50 print in the headline HCOB PMI came despite an expansionary reading in the output index—the tenth in the past 11 months—as three of index’s five sub-components had a negative influence. Most notable was new orders, the weightiest sub-index in the PMI calculation, which were in decline for a third month in succession during January.

Country level data revealed that there were improvements in manufacturing sector conditions in some parts of the eurozone. Expansions were recorded in Greece, France and the Netherlands during January, with the French PMI notably rising to a 43-month high. There were deteriorations in Germany, Italy, Spain and Austria.

Meanwhile, eurozone factories faced more intense cost pressures during January as the rate of input price inflation accelerated to a three-year high. Output charges were virtually unchanged from December, however, signalling constrained pricing power.

Euro area manufacturers grew more optimistic towards the 12-month outlook for production. In fact, business expectations were their strongest since February 2022.

Fibre2Fashion News Desk (DS)