The end of the third quarter saw a mild acceleration in the rate of expansion of the eurozone manufacturing sector. Growth of output, new orders, new export business and employment all improved.
At 52.6 in September, unchanged from the earlier flash estimate, the final Markit Eurozone Manufacturing PMI® rose to a three-month high. The average reading over the third quarter (52.1) was a tick higher than in quarter two (52.0).
National PMI indices signalled expansions in six out of the eight nations covered. Germany led the way, with its PMI rising to a three-month high. Accelerated growth was also seen in Austria and Spain, while Italy moved back into expansion territory and France edged closer to stabilization. Rates of increase slowed slightly in both the Netherlands and Ireland. Greece posted a marginal contraction.
Growth of eurozone manufacturing production accelerated as incoming new business rose at the quickest pace in three months. The improvement in new work inflows reflected stronger demand from both domestic and international clients.
September saw incoming new export business increase for the thirty-ninth successive month. Moreover, the rate of growth was the steepest since April 2014. Further increases were registered in Germany, Italy, Spain and the Netherlands.
The trends in new export orders moved back into expansion territory for Ireland and Austria, but slipped into contraction in Greece following gains in the prior two months. The pace of contraction eased in France.
The ongoing upturn in the euro area manufacturing sector underpinned further increases in employment and purchasing activity during September. Job creation was registered for the twenty-fifth consecutive month, with the pace of growth improving since August. Input buying volumes rose at the steepest pace for three months.
National PMI data signalled that staffing levels were raised in six out of the eight nations covered, the exceptions being decreases in France and Ireland. Job creation accelerated in Germany (56-month record), Italy, Spain and Austria (63-month high), but slowed in the Netherlands and Greece.
The latest expansion of capacity in the euro area manufacturing sector also reflected a further accumulation of backlogs of work at factories. Growth of outstanding business accelerated to a 31- month high.
On the price front, cost burdens facing manufacturers rose for the third month running and at the quickest rate since July 2015. However, the rate of input price inflation remained subdued compared to the long-run survey trend. Average selling prices were broadly unchanged, as increases in Germany and Ireland were offset by decreases in
all of the other nations covered.
Chris Williamson, Chief Business Economist at IHS Markit:
The key message from the September survey is that the euro area’s manufacturing economy continues to expand at an encouragingly solid pace. The PMI points to production rising at a steady 2% annual pace in the third quarter, with momentum picking up in September.