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Financial News: Eurozone Manufacturing Contraction Slowest Since April 201

Eurozone Manufacturing Contraction Slowest Since April 2019

02/03/2020 - 08:50:00 (RTTNews)

(RTTNews) - Eurozone manufacturing contracted at the slowest rate in nine months in January as the decline in output, new orders and purchases eased and business confidence improved.

The euro area purchasing managers' index, or PMI, for the manufacturing sector climbed to 47.9 from 46.3 in December, final survey data from IHS Markit showed on Monday. The flash reading was 47.8.

The reading has remained below 50 for 12 months now, but the latest score was the highest since April 2019.

"The improvement adds to our view that the eurozone economy could see growth strengthen in the coming months, meaning the ECB will hold off with any policy changes and instead focus on its strategic review," IHS Markit Chief Business Economist Chris Williamson said.

"However, key risks which could alter the brightening outlook include the threat of US tariffs and trade war escalation, Brexit-related disruptions to trade as well as uncertainty surrounding the impact of the Wuhan coronavirus."

Among the sub-sectors, consumer goods manufacturing remained the strongest-performer, growing for a second straight month. While the intermediate and investment goods contracted, the rates of decline weakened in both.

New work fell at the slowest pace in a year, partly due to a marginal reduction in new export orders. Output decreased for the twelfth month in a row.

Backlogs of work were cut for a seventeenth month running, albeit at the slowest pace in nearly a year, suggesting spare capacity in the manufacturing economy.

Jobs were cut for the ninth month in a row and the pace of reduction remained sharp. Germany reported the biggest job cuts, followed by Spain.

Input costs fell for an eighth month in a row and output prices fell further, maintaining a trend that has been evident since last July.

Business confidence climbed to its highest level since August 2018 and the improvement was broad-based. Optimism was led by Greece, Ireland and Netherlands, while the morale remained low in Austria and Germany.

In Greece, manufacturing growth hit a five-month high at 54.4. Following the country were Ireland and France. The PMI reached a nine-month high of 51.4 in the former and a two-month high of 51.1. in the latter, revised from its flash 51. Ireland's PMI reading also hit a nine-month high of 51.4.

Germany's PMI reading was revised up slightly to 45.3, an 11-month high, from its flash 45.2. Italy's score hit an eight-month high of 48.9.

In Spain, the factory PMI reached a five-month high of 48.5 and it hit a three-month high of 49.9 in the Netherlands. Austria's measure climbed to a nine-month high of 49.2.

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