The slowdown in the Eurozone manufacturing sector continued into November, according to the latest PMI surveys from Markit. At 50.1, the final seasonally adjusted Eurozone Manufacturing PMI (purchasing managers' index) was only slightly above the no-change level of 50.0 and below its earlier flash estimate of 50.4. Germany, France and Italy contracted in the month.
Markit said five out of the eight nations for which data are collected reported contractions in November, the highest proportion since the current recovery in euro area manufacturing began in July last year. Underlying the drift to near-stagnation were slower growth of output and falling levels of new business. The contraction in new work inflows was the steepest since April 2013, while the increase in new export orders* remained lacklustre.
The level of employment was also broadly flat and too weak to assist efforts to reduce the double-digit rate of unemployment in the region.
Austria and France remained at the foot of the PMI rankings in November, while Italy was third-bottom overall. All three of these nations reported lower levels of production, new orders and employment.
The Greek PMI also signalled contraction.
The German PMI slipped back below the 50.0 dividing line, albeit only marginally, to post a 17-month low. Output growth was the weakest since June 2013, as new orders fell for the third month running and to the greatest extent in almost two years. Markit said the German export engine also moved into reverse gear, with new export orders falling for the first time since July 2013.
Pockets of solid expansion were nonetheless still seen in Ireland, Spain and the Netherlands, with these nations all benefitting from marked gains in output, new business and new export orders.
The overall trend in new export orders at Eurozone manufacturers remained subdued, amid signs of slower global economic expansion. Germany, France, Austria and Greece all reported reduced inflows of new export business. In contrast, Ireland, the Netherlands, Spain and Italy continued to report solid growth in new export orders.
Eurozone manufacturing employment was broadly unchanged in November, as job losses in Italy, France, Austria and Greece were offset by expanded payroll numbers in Germany, the Netherlands, Spain and Ireland. Weak demand, strong competition and spare capacity – as highlighted by declining backlogs of work – were the main factors restricting jobs growth.
Price pressures remained on the downside during November, as output charges and input costs both fell moderately for the third successive month. Only Italy reported an increase in selling prices.
Input costs fell in Germany, Spain, Austria and the Netherlands. Companies in these nations linked the latest reduction to lower prices for oil, energy, petrol, plastics, cotton, dairy products and some raw materials.
*Including intra-Eurozone trade.
Chris Williamson, chief economist at Markit said: "With the final PMI coming in below the flash reading, the situation in euro area manufacturing is worse than previously thought. Not only is the performance of the sector the worst seen since mid-2013, there is a risk that renewed rot is spreading across the region from the core. The sector has more or less stagnated since August, but we are now seeing, for the first time in nearly one-and-a-half years, the three largest economies all suffering manufacturing downturns.
"Germany’s export engine has stalled, causing the steepest deterioration of new orders in the country since December 2012, and new business is also falling in both France and Italy, boding ill for production in coming months.
"Spain, Ireland and the Netherlands remain bright spots, but the worry is that these countries will, like Greece and Austria, struggle to continue to expand unless demand picks up in the region’s largest member states."
The Eurozone Manufacturing (purchasing managers' index) is produced by Markit and is based on original survey data collected from a representative panel of around 3,000 manufacturing firms. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These countries together account for an estimated 89% of Eurozone manufacturing activity.