Eurozone manufacturing activity continued to contract in August due to the downturn in factory output and deeper decline in new orders.
The HCOB final manufacturing Purchasing Managers’ Index posted 45.8 in August, unchanged from June and July, final data from S&P Global showed Monday. The August reading was revised up from 45.6.
The score signaled another sharp deterioration in operating conditions. The reading remained below the threshold 50.0 mark since July 2022.
“Things are going downhill, and fast,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.
“The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a gruelling 26 months and counting,” de la Rubia added.
Manufacturing activity was dented by a further steep contraction in new orders. The fall in total sales was the most pronounced in the year-to-date period. Weaker intakes of new export business were also recorded.
A sharper downturn in sales placed a greater onus on manufacturers’ backlogs as a means to support production. Outstanding business volumes declined at the fastest pace since February.
The survey showed purchasing quantities decreased substantially and the volume of inputs held as stock contracted and inventories of finished products decreased.
Employment levels were reduced further midway through the third quarter, extending the current run of job cutting to 15 months. Manufacturers’ expectations for output growth in the year ahead were at their weakest since March.
Manufacturers reported an increase in their overall input costs for a third straight month. Input cost inflation slowed slightly but remained close to July’s 18-month high. However, manufacturers raised their prices charged for the first time since April 2023.
Of the nations covered by the PMI surveys, Germany and France provided the strongest drags on aggregate factory performance in August.
The only countries that registered growth were Greece, Spain and Ireland, although in the former two, rates of improvement slowed.
The German manufacturing sector showed sharp and accelerated declines in new orders and employment. The final manufacturing PMI fell for the third month in a row and moved deeper into sub-50 contraction territory. The PMI slid to a five-month low of 42.4 from 43.2 in July. The flash score was 42.1.
France’s manufacturing sector downturn deepened in August on weak orders. The HCOB final PMI posted 43.9, down from 44.0 in July. The contraction was the sharpest in seven months and the reading came in above the flash estimate of 42.1.
Spain’s manufacturing sector expanded in August but the pace of expansion was the slowest in the current sequence of expansion. The PMI fell to 50.5 in August from 51.0 a month ago.
Elsewhere, Italy’s manufacturing conditions deteriorated at a softer pace in August. The factory PMI advanced to 49.4 from 47.4 in July.
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