(Finance) – After showing modest signs of recovery during the first quarter, the manufacturing economy of the Eurozone recorded, at
half of the second quarter, the second consecutive month of contraction of the production.
According to the latest HCOB PMI survey, production volumes fell at the fastest rate since last November, reflecting an increasingly evident dampening effect from demand, with new orders also posting the steepest contraction in six months. The manufacturing companies they continued to complete their outstanding work to try to support production. In fact, May’s work-in-progress declined at a faster rate.
Manufacturing employment levels have increased for the 28th consecutive month, although the latest job creation rate equals the low reached during this sequence.
The Eurozone HCOB Manufacturing PMI, compiled by S&P Global, decreased from 45.8 points in April and reached 44.8 in May. Falling below the neutral threshold separating expansion from contraction of 50, the latest value signaled a new decline in the health of the manufacturing sector of the eurozone, and the highest in three years.
Between eight countries monitored by the survey (representing approximately 89% of total manufacturing activity),
once again Greece was the only member state to see an improvement in operating conditions since April.
Having said that, the growth has been slower and only modest. In other countries, except France, a
worsening of the manufacturing sector compared to the previous month. In many cases, the rates of deterioration have been the highest
observed since the initial peak of the Covid-19 pandemic in May 2020.
By analyzing the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: “Weakness in manufacturing demand, which has become increasingly evident since the beginning of the year with the decline in PMIs, it has now prompted the sample firms to reduce their output for the second consecutive month. In the labor market, the contraction has not yet taken hold. On balance, despite the difficult ordering situation, the companies interviewed are still hiring more employees and are reluctant to cut staff for fear of not being able to fill the positions again when the situation improves. This highlights a kind of optimism as, after all, most of the companies surveyed expect to produce more during the next twelve months than they are producing now.”
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