The rate of growth in the eurozone manufacturing sector continued to slow in February, as expansions in production, new orders, new export business and employment all lost momentum.
At 51.2 in February, from 52.3 in January, the final seasonally adjusted Eurozone Manufacturing PMI® fell to a 12-month low despite posting slightly above its earlier flash estimate of 51.0. The PMI has remained above the neutral 50.0 mark for 32 successive months.
Manufacturing production rose at the slowest pace for a year, as rates of expansion in new business and new export orders eased to the weakest since April 2015 and January 2015 respectively. Job creation was registered for the eighteenth month running, but the rate of increase in staffing levels
National PMI data signalled growth in seven out of the eight countries covered by the survey, although only one (Austria) recorded a faster rate of increase than in January. The Greek PMI fell back into contraction territory for the first time in three months, as production, new orders and employment all fell. The subdued performance of the ‘big-two’ nations also weighed on the euro area PMI, with growth in both Germany and France only slightly above the stagnation mark.
The rate of expansion in German manufacturing output was the slowest since December 2014, as growth of both new orders and new export business eased further. This filtered through to the German labour market, with manufacturing job cuts reported for the first time in one-and-a-half years. Although the France Manufacturing PMI ticked higher, the underlying dynamics of the data remained weak overall. Production, new orders and new export orders all contracted, leading to no change in manufacturing employment.
Italy, Spain and Ireland all saw their respective rates of growth for output, new orders and new export orders weaken during February. The Netherlands also saw production rise at a slower pace, while total new orders were unchanged compared to one month ago. Brighter news was provided by the trend in employment for Spain, Ireland and the Netherlands, however, with job creation accelerating in all three.
Price pressures remained firmly on the downside during February. On the cost front, average purchase prices fell for the seventh month running and to the greatest extent since July 2009. Intense competition among suppliers and weaker global commodity prices both contributed to the latest decrease in manufacturers’ costs. Suppliers’ delivery times, a key gauge of capacity utilisation, pointed to the weakest supply chain pressures since July 2013.
Average factory gate prices fell for the sixth straight month, with only Austria reporting an increase among the nations covered by the survey. Furthermore, the rate of output charge deflation at eurozone manufacturers accelerated to the fastest since June 2013. Lower selling prices reflected reduced purchasing costs and weakening growth in new order volumes.