The eurozone manufacturing sector continued to make steady progress at the end of the third quarter, as production and new business both expanded at modest rates. Cost pressures shifted to the downside, however, with input costs and selling prices falling during the month.
The final seasonally adjusted Eurozone Manufacturing PMI® eased to a five-month low of 52.0 in September, below August’s 52.3 and unchanged from the earlier flash estimate. The latest reading was broadly in line with those registered over the past seven months.
The average PMI level over the third quarter as a whole (52.3) was unchanged from that in the second quarter. The respective averages for the Output Index and New Orders Index were both slightly higher than in quarter two.
Manufacturing production rose for the twenty seventh successive month in September, as companies scaled up output in response to rising new order inflows and a further accumulation of backlogs of work. However, the rates of increase in production and new business were both a notch lower than in the prior month. Ireland topped the Manufacturing PMI growth table in September, and was one of only two nations (the other being Austria) to see growth accelerate. The Netherlands was in second position overall.
France moved back into expansion territory, leaving Greece as the only nation to report a contraction. French output rose for the first time in three months and at the quickest pace since March 2014, as the trend in new orders moved closer to stabilising.
Italy saw solid expansions in both output and new orders, although the rates of increase slowed sharply to eight- and seven-month lows respectively. Output growth also eased in Germany (two-month low) and Spain (weakest since August of last year). Both nations saw slower increases in new business.
New export order inflows improved again in September, rising for the twenty-seventh successive month. Only Greece reported lower volumes of new export business. Faster rates of growth were registered in Italy, Spain and Ireland, but slower increases were seen in Germany and the Netherlands.
Job creation was recorded for the thirteenth straight month in September. Although the overall rate of growth eased to a four-month low, broad-based increases were seen across Germany, Italy, Spain, the Netherlands, Austria and Ireland. The trend in employment moved closer to stabilisation in France, while the rate of decline in Greece remained sharp despite slowing since August.
Price pressures shifted to the downside in September. Average input costs fell at the fastest pace in eight months, which companies attributed to lower commodity (especially oil) prices. Almost all of the nations covered reported sharp drops in input costs, the sole exception being Greece – which registered a solid rate of increase.
Meanwhile, output charges decreased for the first time in six months. Austria reported no change in average selling prices, whereas the remainder of the nations covered all saw output charges fall.