Eurozone manufacturing activity falls to four-month low
By Michele Maatouk
Date: Monday 03 Apr 2023
(Sharecast News) - Eurozone manufacturing activity fell to a four-month low in March, according to data released on Monday.
S&P Global's final eurozone manufacturing purchasing managers' index declined to 47.3 from 48.5 in February. A reading below 50.0 indicates contraction, while a reading above signals expansion.
S&P Global said much of the month-on-month drop was due to the suppliers' delivery times index - which is inverted in the calculation of the headline PMI - surging to a survey record. It noted that the key sub-components of the headline indicator measuring factory health such as output, new orders and employment were little changed on the whole.
Meanwhile, the final eurozone manufacturing output index was 50.4 in March, up from 50.1 a month earlier and hitting a 10-month high.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "Eurozone manufacturing remains in troubled waters, with factories reporting a fall in demand for goods for an eleventh straight month amid the surging cost of living, tighter monetary policy, a shift to inventory destocking and subdued customer confidence.
"Fortunately, a record improvement in supplier lead times and greater input availability has allowed firms to fulfil orders placed in prior months, meaning output has been broadly flat over the past two months. However, this current level of output is clearly not sustainable, and it is inevitable that production will weaken in the coming months unless order book growth revives."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said that based on the headline alone, eurozone manufacturing remained depressed at the end of the first quarter, but that "the conclusion is slightly misleading".
He pointed to the fact that the main driver of the headline decline was the surge in the suppliers' delivery times index and said this adds "to the evidence that supply-side constraints and disruptions are now yesterday's story".
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