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Financial News: Eurozone Manufacturing Downturn Slows In January

Eurozone Manufacturing Downturn Slows In January

02/01/2024 - 06:47:00 (RTTNews)

(RTTNews) - The euro area manufacturing downturn slowed in January on softer decreases in factory output and new orders, final data from S&P Global revealed on Thursday.

The HCOB manufacturing Purchasing Managers' Index rose to 46.6 in January from 44.4 in December. This was the highest reading in ten months. The flash score was confirmed.

All five components of the PMI provided positive directional influence. New orders and output declined in January but the rates of decline were their weakest for nine months. Exports sales dropped at the slowest pace since April. There was substantial spare capacity as evidenced by yet another sharp decrease in backlogs of work. Employment continued to fall in January but the latest fall was the softest in four months.

Further, input buying dropped at the weakest pace since last March. Inventory levels decreased further in January, although a softer reduction in pre-production stocks contrasted with a quicker decline in holdings of finished goods.

Despite renewed supply chain disruption caused by the rerouting of ships away from the Suez Canal, inventory drawdown continued.

There were sustained declines in input costs and output charges, with rates of decrease accelerating for the first time since last July and September, respectively. Further, manufacturers were more optimistic about outlook as expectations rose for the first time since last April.

"Let's face it, there is a real chance that the manufacturing sector's year-long recession in the eurozone could stretch into the first quarter of this year," said Hamburg Commercial Bank Chief Economist Cyrus de la Rubia.

Among big-four economies, Spain and Italy showed encouraging signs of improvement. Germany's manufacturing downturn eased in January but remained deep in the contraction zone. Meanwhile, France's manufacturing activity remained under intense pressure at the start of the year.

Germany's manufacturing PMI came in at an 11-month high of 45.5, up from 43.3 in December and slightly above the flash score of 45.4.

At the same time, France factory index posted 43.1, up from 42.1 in the prior month. The flash reading was 43.2.

Spain's factory PMI rose more-than-expected to a 10-month high of 49.2 in January from 46.2 in the prior month. The reading was seen at 48.0.

Similarly, Italy's manufacturing PMI advanced to 48.5 from 45.3 a month ago. The score was forecast to climb to 47.0.

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