Eurozone Manufacturing Activity Falls Deeper Into Contraction

(RTTNews) - Eurozone manufacturing sector fell deeper into contraction in September on falling output, orders, employment and procurement activity, final data compiled by S&P Global showed on Tuesday.

The HCOB factory Purchasing Managers' Index dropped to 45.0 in September from 45.8 in August. The flash reading was 44.8.

The latest score was the lowest in the year-to-date period and was also below average seen across the current 27-month downturn.

Production continued to fall in September and at the fastest rate in the year-to-date period. Likewise, new orders decreased at the fastest pace since December. Sales performances were also adversely affected by global conditions.

There was broad-based retrenchment in factories. Purchasing activity shrank at the quickest rate since last December, while inventories were depleted more rapidly. Further, staffing capacity continued to be cut and the job shedding was the most pronounced since October 2012, excluding pandemic-hit months.

With the level of incoming new orders shrinking further, manufacturers made additional inroads to their backlogs of work in September.

On the price front, input costs dropped for the first time since May. Prices of goods leaving the factory gate also decreased in September.

Looking ahead, eurozone manufacturers remained slightly optimistic on balance, with those forecasting growth over the next 12 months still outnumbering those predicting contraction.

National survey showed that Spain was the strongest performer with growth improving to a four-month high. Meanwhile, Germany recorded its most pronounced worsening of factory conditions for twelve months.

"While handling the global manufacturing downturn surprisingly well, Spain just does not have enough weight to lift the rest of the eurozone with it," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"The worsening industrial slump in Germany, for example, is too big for Spain's momentum in September to make much of a difference," de la Rubia added.

Germany's manufacturing PMI plunged to a 12-month low in September. The index registered 40.6, down from 42.4 in August but came in above the flash score of 40.3.

France's manufacturing economy also continued to be blighted by subdued demand conditions with further deterioration in new orders leading output, purchasing, inventories and employment all to fall further in September. The factory PMI posted 44.6 compared to 43.9 in August. The initial score was 44.0.

The downturn in the Italian manufacturing sector deepened in September as output, new orders and pre-production inventories declined at faster rates. The HCOB factory PMI slid to 48.3 in September from 49.4 in August.

Spain's manufacturing activity posted strong growth in September on solid increases in output and new orders. The headline HCOB PMI rose to 53.0 from 50.5 in August. Manufacturing activity continued to grow for the eighth straight month.