The eurozone manufacturing sector remained in a state of near-stagnation in October, as weak demand continued to restrict growth of both output and employment across the currency union. At 50.6 in October, up from September’s 14-month low of 50.3, the final seasonally adjusted Markit Eurozone Manufacturing PMI® registered only marginally above the neutral 50.0 mark. That said, the current sequence above the no-change level was extended to 16 months.
National PMI data again highlighted the ongoing performance disparities between countries. Four nations signalled expansion during October, with the Irish PMI remaining far out in front and ticking higher following a slight easing in September. The PMI for the Netherlands also gained, moving into second position, while the Spanish PMI held steady.
Germany was the only other nation to signal improved overall manufacturing performance in October. Of the remaining big-three nations, the downturn in France accelerated and Italy fell back into contraction. The rate of deterioration in Greece eased, while Austria fell further from the rest of the pack as its PMI sank to a two-year low.
The level of new orders at eurozone manufacturers declined for the second successive month in October, albeit to a slightly less marked degree than in the previous month. New orders fell in Germany, France, Italy, Austria and Greece, in contrast to the strong gains registered in Spain, the Netherlands and Ireland.
The weakness in overall new business inflows was mainly centred on domestic markets as new export orders* posted a modest gain.
The news from the external demand front was less than positive, however, as the latest increase was the slowest during the current 16-month sequence of growth. France and Austria both reported contractions in new export business. The remaining nations covered by the survey all reported increases, with solid growth in Spain, the Netherlands and Ireland, and comparatively modest expansions in Germany, Italy and Greece.
Manufacturing production rose for the sixteenth month running and at a slightly quicker pace than in September. Output growth rates accelerated in Germany, Spain, the Netherlands and Ireland. Production was scaled back further in France, Austria and Greece. Italy fell back into contraction following a 16-month sequence of growth.
October saw employment increase for the second month running. The pace of job creation remained near-stagnant, despite accelerating to a five-month high. The outlook for employment also remained muted, given the lacklustre trend in new orders and a further decrease in backlogs of work.
Payroll numbers in Germany and Ireland rose at the sharpest rates since January 2012 and May 2014 respectively. Slight gains were also signalled for Spain and the Netherlands. Job cuts were reported by France, Italy, Austria and Greece.
On the prices front, average input costs and output charges both declined in October. Lower purchase prices were often linked to reduced raw material costs and the decline in the price of oil. Lower output charges mainly reflected strong competition.