(Finance) – The contraction in euro area manufacturing continues in the fourth quarterwith October production volumes declining for the nineteenth consecutive month. Production was constrained by yet another sharp decline in new manufacturing orders, leading to another reduction in staffing levels. On a positive note, there was less contraction in output, sales and employment, although optimism slipped to its lowest level in a year. This was revealed by the survey on the expectations of company purchasing managers, conducted by Hamburg Commercial Bank for S&P Global.
THE’index of purchasing managers of manufacturing activities in the Eurozone stood at 46 points in Octoberbeing higher than the preliminary estimate of 45.9 and increasing compared to the previous 45, but remaining below the critical threshold of 50 points which acts as a watershed between growth and recession.
As regards the most important economies of the Euro Area, theItaly sees the manufacturing PMI fall to 46.9 points from 48.3 points previously, below the preliminary one (48.8). There Germany sees the manufacturing PMI increase to 43 points from 40.6, higher than the preliminary 42.6. There France recorded a decline to 44.5 points, equal to the preliminary estimate, from 44.6 points in the previous month.
“The good thing about the latest October data is that there was no worsening of the recession of the manufacturing sector – he commented Cyrus de la RubiaChief Economist at Hamburg Commercial Bank – Output fell at a slower rate than last month, and new orders fell at a slower rate. As a result, very short-term forecasts, which include multiple indicators in addition to the PMI, suggest that fourth-quarter manufacturing production could contract by 0.1%.”
“It is not encouraging to know that the reduction in purchasing inventories is continuing at an unusually high level – he added – The Covid-19 crisis has left its mark and the current reduction in inventories is clearly linked to the fact that companies have purchasing and accumulating material and intermediate goods at unprecedented levels in 2021 and 2022. One Stagnant demand offers no reason to replenisha factor that inevitably affected the economy”.