Final PMI (Purchasing Managers' Index) data confirm that the rate of deterioration of the Eurozone’s manufacturing economy continued to gather pace in February. The Markit Eurozone Final Manufacturing PMI fell from 34.4 in January to 33.5, the lowest reading in the eleven-and-a-half year history of the survey and also slightly below the earlier Flash reading of 33.6.
The renewed downturn in the PMI was driven by output falling at a new record rate, and to a greater extent than signalled by the Flash, registering the ninth successive monthly fall in production.
Slower rates of decline in Germany, Spain, the Netherlands, Greece and Austria were countered by sharp accelerations in rates of contraction in France and Ireland and a more moderate acceleration in Italy, with all three latter countries seeing record falls in output.
By product sector, consumer goods producers again saw a weaker pace of contraction than makers of intermediate and investment goods, though all three sectors saw rates of decline at or near to all-time highs.
New orders also fell at an increased rate, and by faster than signalled by the Flash, with both total new orders and new export orders posting the second-steepest falls on record. Germany saw the steepest fall in new orders and new export orders of all countries. Rates of decline rose particularly sharply in France, Ireland and Greece, but eased in Spain, Austria and the Netherlands.
The reduced inflow of new business caused backlogs of work to fall at a rate just shy of December’s record contraction, dropping sharply in all countries surveyed and forcing increasing numbers of companies to reduce operating capacity.
Employment was cut at a record rate (in line with the Flash), with the rate of job losses in the current downturn far exceeding that seen at any previous time over the survey’s history. Job losses hit all-time highs in Germany, Italy, Ireland, Austria and the Netherlands. Modest easings in rates of decline were meanwhile seen in Spain, France and Greece.
Inventories of finished goods fell for the second month running as firms reduced stock levels to save costs. Stocks fell in all countries except Italy.
Stocks of raw materials and other inputs likewise fell sharply, at a near-record rate, as manufacturers’ purchasing fell at the fastest rate yet seen by the survey. The reduced buying meant suppliers were less busy and increasingly able to meet demand from stock. Delivery times consequently showed the greatest shortening in the survey’s history.
Faster deliveries usually signal a buyers’ market, and manufacturers’ input prices showed a corresponding record fall, down for the fourth month in a row, as suppliers offered discounts. Steep falls in input prices were seen across all countries.
Manufacturers themselves reported the need to offer discounts to boost sales, causing output prices to fall for the fourth month running – and to show a record drop (slightly greater than the Flash). All countries except Greece saw rates of decline hit all-time highs.
Commenting on the PMI data, Markit Chief Economist, Chris Williamson said:“The final Eurozone PMI data are a further disappointment on the earlier Flash numbers for February, and indicate that the rate of decline of manufacturing has yet to stabilise. The data are consistent with manufacturing output and employment falling at annual rates in the region of 12% and 5% respectively. Germany is currently seeing the steepest downturn in demand, though sharply falling sales remain widely reported by country and product sector.”
The Eurozone Manufacturing PMI (Purchasing Managers' Index) is produced by Markit Economics and is based on original survey data collected from a representative panel of around 3,000 manufacturing firms. The final Eurozone Manufacturing PMI follows on from the flash estimate which is released a week earlier and is typically based on approximately 85-90% of total PMI survey responses each month. The February flash was based on 94% of the replies used in the final data.
