Eurozone’s final Manufacturing Purchasing Managers’ Index (PMI), measuring the eurozone activity level of purchasing managers in the manufacturing sector declined 51.1 points lower in September, meeting analysts estimated of 51.4 in August, Markit Economics confirmed.
“An improvement in euro zone manufacturing business conditions for a third straight month in September sends a reassuring signal that the sector is providing an all-important lift for a region that has been besieged by recession”, Chris Williamson, chief economist at Markit, said on Tuesday.
“Even manufacturers in the region’s ‘periphery’ are reporting better demand for their goods. Orders rose for the fourth month running in Spain and for the third successive month in Italy and Ireland. In the region’s ‘core’, orders likewise rose for a third month running in Germany and the Netherlands and even the recent laggard France saw the first upturn in demand for just over two years” Williamson added.
“Although signaling the best performance for over two years in recent months, the PMI slipped slightly compared with August and remains only just above the 50 ‘no change’ level, indicating that this is still early days in what looks like a fragile recovery.”
Final Manufacturing PMI – German Activity
Germany’s manufacturing sector maintained its expansion in September, while the final manufacturing PMI slightly dropped to 51.1 in September.
“Germany’s manufacturing sector looks to have expanded at a reasonably solid pace through the third quarter of the year, despite growth momentum easing in September. A robust performance from investment goods producers helped sustain manufacturing growth, while the main drag was from weaker consumer goods production,” Tim Moore, senior economist at Markit said.
“Despite output volumes remaining on an upward tilt, manufacturers were cautious about their payroll numbers during September, reflecting relatively subdued demand from emerging markets and a general lack of pressure on operating capacity”, Moore added.
Italy’s Activity Worsens
The manufacturing sector in Italy worsened in September, as the manufacturing PMI for the country dropped to 50.8 points in September from previous reading of 51.3 in August, Markit Economics said. Analysts had forecasted the reading to come in at 51.1.
“The headline manufacturing PMI slipped from its recent high in August but was nevertheless in expansion territory for a third straight month, implying that the sector has made a positive contribution to GDP in the third quarter. Data suggested that the slowdown in growth in September was mainly attributable to fragility in the domestic economy, with the recent surge in new export orders continuing”, Phil Smith, economist at Markit said.
Activities in the Spanish industrial sector worsened in September, as the manufacturing PMI came in at 50.7 points, down from the previous reading of 50.1 points in the previous month.
“The September manufacturing PMI for Spain confirms the picture of gradual improvement seen in the third quarter of the year, supported again by solid growth of exports. It remains to be seen whether this stabilisation can be translated into a period of expansion or whether the sector will slip back into contraction again,” Andrew Harker, senior economist at Markit stated.
France Activity Picks Up
The business activity in the French manufacturing sector showed a slight boost in September, as the final manufacturing PMI rose 49.8 points higher in September. Slightly higher than the previous reading of 49.7 in August.
“Although French manufacturing output fell again in September, a rise in new orders for the first time in over two years suggests that conditions in the sector are stabilising. Moreover, a sharp fall in stocks of finished goods suggests that production will have to be raised soon if demand continues to hold up,” senior economist at Markit Jack Kennedy said on Tuesday.
“Looking at the data relating to the supply chain, low stock levels at vendors resulted in a marked lengthening of lead times, while input prices showed a renewed rise as the cost of a number of raw materials increased,” he added.
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