Eurozone Manufacturing Downturn Continues

(RTTNews) - The euro area manufacturing downturn continued in October albeit at the slowest pace in five months, survey data published by S&P Global showed on Monday.

The HCOB manufacturing Purchasing Managers' Index increased to 46.0 in October from 45.0 in September. The flash score was 45.9.

The score suggests that the sector posted its slowest fall since May. Nonetheless, factory activity shrank for the twenty-eighth successive month, marking the longest downturn since the survey began in 1997.

"There is one bit of good news in these numbers: the recession in the manufacturing sector did not deepen further in October," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

According to GDP nowcast, which takes into account numerous other indicators in addition to the PMI, industry output could shrink by 0.1 percent in the fourth quarter, de la Rubia added.

The survey showed that factory output continued to fall but the rate of contraction cooled since September. Production lines were once again squeezed by a lack of incoming new work.

Manufacturers reduced their purchasing activity, as they have done in every month since July 2022. Pre-production stocks shrank at a sharp rate amid sustained tapering of input buying.

Employment was reduced further in October. The rate of job shedding held close to September's 49-month record. Manufacturers' growth expectations were at their weakest in a year.

Costs faced by manufacturing companies declined in October. The reduction in input prices was the fastest since March. Manufacturers discounted the charges of goods leaving the factory gate to the greatest extent in six months.

Further, the survey showed that confidence among manufacturers declined to a one-year low in October.

The overall eurozone manufacturing sector was weighed down heavily by Germany and France.

Germany's manufacturing sector remained firmly in the contraction zone. The headline HCOB manufacturing PMI hit 43.0 in October, up from September's 12-month low of 40.6 in the previous month. This was the highest since July and also above the flash reading of 42.6.

France's manufacturing activity also continued on accelerated declines in new orders and production. The HCOB final factory PMI posted 44.5, in line with flash estimate, and slightly down from 44.6 in September.

Italy's manufacturing sector contracted more sharply in October. The HCOB factory PMI slid to 46.9 from 48.3 in the previous month. There were declines in new orders and output with a substantial fall in the international sales environment. On the other hand, Spain's factory sector expanded at the fastest pace in over two-an-a-half years in October, driven by significant growth in output and new orders amid an improvement in market demand. The index rose to 54.5 from 53.0 in September.