Downturn in eurozone manufacturing eases - PMI
By Abigail Townsend
Date: Thursday 01 Feb 2024
(Sharecast News) - The downturn in the eurozone manufacturing sector showed signs of easing in January, according to a closely-watched survey published on Thursday.
The HCOB eurozone manufacturing PMI was 46.6 last month, still in negative territory but a notable improvement on December's 44.4. It was also the highest level in ten months.
Factory output and new orders, meanwhile, declined at their softest rates since April 2023. The PMI output index rose to 46.6, a nine-month high.
Decreases in both input costs and output prices gathered momentum in January, the survey noted, despite delivery times lengthening for the first time in a year due to disruption in the Red Sea.
However, while there were signs of improvement, manufacturers continued to trim headcount during the period.
The survey also highlighted "substantial" spare capacity across factories, with another sharp monthly drop in backlogs of work.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "Let's face it, there's a real chance that the manufacturing sector's year-long recession in the Eurozone could stretch into the first quarter of this year.
"For those with a glass half-full perspective, the manufacturing PMI indicators offer a dose of optimism. The headline PMI has marked three consecutive months of increase, a trend mirrored in the forward-looking indicator for new orders."
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Eurozone manufacturing was still in the doldrums at the start of the year, but there are signs that demand is not plummeting as quickly now, and therefore green shoots for the outlook.
"Admittedly, supply issues have returned. But so far these delays have not been significant enough to impact output.
"Demand is still falling though, and so firms again turned to running down work backlogs."
Among individual countries, the manufacturing PMI in Spain was 49.2, in France it was 43.1 and in Italy 48.5. In Germany, the bloc's largest economy, it was 45.5, an 11-month high.
A panel of around 3,000 private sector manufacturing companies was surveyed between 11 and 24 January. A reading below the neutral 50 level suggests contraction, while one above it indicates growth.
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