No green shoots yet. Just dying more slowly…hoping that China and the U.S. will eventually save Europe.
The downturn in the Eurozone manufacturing sector eased in November, as the rates of contraction in output, new orders and employment all slowed.
At 46.2, up from 45.4 in October, the seasonally adjusted Markit Final Eurozone Manufacturing PMI® rose to an eight-month month high and was unchanged from the earlier flash estimate. The PMI has signalled a deterioration in manufacturing business conditions in each of the past 16 months.
Contractions were signalled for almost all of the nations covered by the survey, Ireland being the sole exception. Rates of decline eased in Germany, France, Spain, Austria and Greece, with the extent of the moderation in Austria particularly marked. Italy and the Netherlands saw steeper rates of contraction, but Greece nonetheless remained at the
bottom of the PMI league table.
Manufacturing production contracted for the ninth successive month in November, although the rate of decline was the weakest since April of this year. Output rose at consumer goods producers, but fell in both the capital and intermediate goods sectors.
Companies are facing reduced levels of new work from domestic markets and lower exports. However, the rates of contraction in both total new orders and new export business eased to eight month lows. New export orders declined for the seventeenth successive month, largely due to reduced demand from within the euro area and weaker global market conditions. Reductions were reported in all nations bar the Netherlands and Ireland. The steepest declines were again seen in Greece and Germany, despite the rate of contraction easing to an eight month low in Germany.
Excess capacity remained present in the Eurozone manufacturing sector in November, as backlogs of work fell for the eighteenth month in a row. The combination of weak demand and spare capacity led to further job cuts. Employment fell for the tenth straight month, albeit to a slightly lesser degree than in October, with further losses reported in almost all of the nations covered. Only the Netherlands saw a steeper rate of decline during November, as the pace of job losses eased in Germany, France, Spain, Austria and Greece. For Germany, the rate decline was only marginal.
The latest reduction in payroll numbers also reflected continued cost caution at manufacturers, as were further depletions of both inventories of purchases and finished products. By far the steeper decline was signalled for pre-production stocks, as purchasing activity was cut back markedly. Input buying volumes decreased for the seventeenth successive month, with the rate of decline much sharper than the survey average.
Although costs continued to rise, average selling prices fell, reflecting weak demand and ongoing strong competition. The rate of at which
prices were cut remained only minor, however.
The following country-specific comments show that demand from within the Eurozone remains very weak.
From Markit’s Germany PMI:
Although new export volumes dropped sharply, the latest decrease was also the weakest for eight months. Some firms noted that improved demand from China had helped offset a continued reduction in new orders from clients within the euro area.
France Markit’s France PMI:
Data suggested that domestic demand was still muted, as the fall in total new orders was again considerably more pronounced than that signalled for export sales.
From Markit’s Italy PMI:
Adding to continued weakness in the domestic economy, data pointed to a renewed downturn in new export orders, with France and Germany highlighted by panellists as key markets where business was lost.
From Markit’s Spain PMI:
Panellists indicated that the domestic market had been the main source of falling new orders. New export orders also decreased, following stabilisation in October, but the rate of decline was much slower than for total new business.