Eurozone manufacturing contracts at record pace

Posted on: May 4th, 2020 by PhilM

The final IHS Markit Eurozone Manufacturing PMI® for April confirmed that Eurozone manufacturing experienced a major further deterioration in operating conditions.

Output, new orders, export sales, and purchasing activity all fell at record rates, whilst supply side constraints intensified to an unprecedented extent. Confidence about the future sank to a fresh series low.

The by-country ranking of overall manufacturing PMI readings is:

Netherlands 41.3   131-month low
Ireland          36.0 133-month low
Germany     34.5   133-month low
Austria         31.6  series low
France         31.5 series low
Italy               31.1 series low 
Spain           30.8 136-month low
Greece         29.5 series low 

The headline index reading is a composite of five indices. Lengthening suppler lead-times and rising stocks of purchases normally signify stronger manufacturing conditions so contribute positively to the overall reading. The extraordinary circumstances of the coronavirus pandemic mean these elements are inflating the headline reading.

Within the individual country PMI reports the underlying output indices are far more depressed. Germany’s output index for April, as an example, fell to 19.7. Italy’s output index fell by 16.4 points month on month.

Other European countries, not contributing to the Eurozone index, are showing similar patterns. Poland’s headline manufacturing reading fell to 31.9, with output and new order indices falling below that level. Similarly, the headline reading for Czechia fell to 35.1 in April, with output and new order readings descending deeper into contraction. 

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