Eurozone Manufacturing Activity Slips Back Into Contraction

(RTTNews) - Eurozone manufacturing activity worsened in September reflecting a reduction in new orders and a sharper fall in job shedding, final purchasing managers' survey data compiled by S&P Global showed Wednesday.

The HCOB manufacturing purchasing managers' index fell to 49.8 in September from 50.7 in August. The reading was above the flash estimate of 49.5.

New orders received by manufacturers dropped at a mild pace but the decline was the fastest since March. Export markets were a drag on total sales. Despite the fall in orders, production increased again, stretching the current sequence of growth that began in March.

Workforce numbers declined at the fastest pace in three months. Manufacturers were able to make greater inroads to their backlogs of work in September. Purchasing was reduced in September and the rate of decline accelerated in back-to-back months. Manufacturers' demand for inputs contracted at the steepest pace since April. Manufacturers reported lower operating costs for the first time since June. Businesses discounted prices and passed on the benefit to customers.

Further, goods producers were optimistic that output would be higher than present levels in twelve months' time. However, expectations were their weakest since April. Weakness was recorded across the currency union's three biggest economies, Germany, France and Italy, while Spain continued its growth trend.

Germany's manufacturing activity contracted again in September due to the negative developments in new orders and employment. The final factory PMI dropped moderately to 49.5 from 49.8 in the previous month. However, the reading was well above the flash estimate of 48.5.

France's manufacturing activity showed steeper contractions in output and new orders in September. The HCOB final factory PMI hit 48.2, down from 50.4 in the previous month but slightly above the flash reading of 48.1.

The Italian manufacturing sector tipped back into contraction territory in September. The index slid more than expected to 49.0 from 50.4 in the previous month. The reading was seen at 49.9.

Spain's manufacturing activity continued to expand in September but at the slowest pace in three months. The HCOB factory PMI posted 51.5, down from August's 54.3 and also below forecast of 53.8.