At the conclusion of the third quarter of this year, the manufacturing sector of the euro zone’s economy continued to rapidly decrease, according to S&P Global.
S&P Global’s most recent manufacturing purchasing managers’ index (PMI), compiled by Hamburg Commercial Bank (HCOB), decreased little from 43.5 in August to 43.4 in September.
Since the survey’s inception in 1997, new orders have continued to decline at a rate that has seldom been surpassed.
Importantly, this was the sixteenth consecutive month that the headline index registered in the sub-50.0 range, showing a persistent deterioration in the condition of the manufacturing sector in the euro area. Even while input costs continued to fall substantially, businesses’ efforts to further cut costs were demonstrated by persistent declines in employment, purchasing activity, and inventories. Production reductions were subsequently continued in September, according to a note from S&P Global.
In the meantime, corporate confidence was noticeably declining, and growth estimates hit a ten-month low. To increase competitiveness and bolster demand, manufacturers in the euro zone cut the prices they charged for a fifth consecutive month, and by one of the largest amounts recorded in 14 years.
All other countries under observation had declines during September, with the exception of Greece. The Netherlands and France were the next two countries to see the fastest rates of decline after Germany and Austria. The contractions in September for the latter two were the steepest in over three and a half years.
Even while the health of the industrial sector deteriorated in Italy and Spain as well, the rate of decline moderated.
Additionally, there was a considerable weakness on the export front. Manufacturers’ response was to lower production levels for the fourteenth time in the previous 16 months. The decline was abrupt and a little bit quicker than in August.
Manufacturers in the eurozone made additional headway on their backlogs of work in the absence of demand pressures.
Factory operating costs in the euro zone continued to decline. Despite slowing to its lowest level since April, the decline was generally significant. Reduced input costs gave businesses more freedom to choose their pricing methods.
