The IHS Markit Eurozone Manufacturing PMI® dropped to its lowest level since Autumn 2012, with a reading of 45.7 – down from August’s final reading of 47.0.
Output, new orders and purchasing all fell sharply in September, with conditions deteriorating in all three market groups. Investment goods registered the sharpest deterioration, followed by intermediate goods. Consumer goods recorded a sub-50 contraction reading for the first time since November 2013.
The region’s manufacturing downturn was led by rapidly deteriorating operating conditions in Germany, with its PMI (41.7) falling to the lowest level since June 2009. Austria (45.1) also experienced a notable deterioration, whilst Spain (47.7), Italy (47.8), and Ireland (48.7) recorded sub-50.0 PMI readings during September. Meanwhile, France (50.1) barely grew whilst there was only modest growth, albeit at an unchanged rate, in the Netherlands (51.6). Greece (53.6) remained the best-performing of all countries, despite its rate of expansion slipping to a three-month low.
The fall in the headline PMI was driven mainly by the sharpest contraction in new orders in nearly seven years. Demand weakened from both domestic and export markets, depressing production by the greatest month-on-month output fall since end 2012. Employment numbers fell for the fifth consecutive month.
Purchasing activity also fell and average purchase prices decreased, extending the current period of deflation to four months. Manufacturers reduced outgoing charges at a slightly faster rate than input inflation.