The final IHS Markit Eurozone Manufacturing PMI® for January read 47.9, up from December’s reading of 46.3, reflecting slower falls in output, new orders and purchasing. Business confidence also improved during January to the highest level in 16 months.
Operating conditions in the euro area manufacturing economy continued to weaken at the start of the year but at a noticeably slower rate. The consumer goods category remained the strongest performer during January, registering marginal growth for the second successive month. In contrast, the intermediate and investment goods sectors both continued to contract, although the rates of decline in both weakened.
Greece had the strongest PMI reading at 54.4 while Germany continued to foot the table with a reading of 45.3 – nevertheless reaching an 11-month high. Ireland (51.4) and France (51.1) both recorded expansion, albeit at modest rates of growth. Modest deteriorations in operating conditions were reported for Italy (48.9) and Spain (48.5), whilst Austria (49.2) and the Netherlands (49.9) saw marginal deteriorations.
Markit Chief Business Economist, Chris Williamson, commented: “Eurozone manufacturing started 2020 with green shoots of recovery in sight. Most encouragingly, order books moved closer towards stabilisation, falling to the smallest extent since late 2018. With the survey indicating the steepest fall in warehouse stocks since September 2016, the new orders-to- inventory ratio, a key forward-looking indicator for factory production, surged to its highest for nearly one-and-a-half years.
“Expectations for output growth also leaped to the highest since August 2018 amid a broad-based improvement of sentiment across the region, with an especially important upturn in confidence seen in Germany.”