Tuesday’s survey shows a worrying trend for the Eurozone as manufacturing activity across the region deteriorates at an alarming rate in September, due to a sharp decline in demand even though factories are cutting their prices.
The decline was widespread, with Germany, the largest economy in Europe, experiencing its sharpest decrease in factory conditions in a year.
HCOB’s final Eurozone manufacturing PMI contracted to 45.0 in September. Though the figure exceeded the preliminary estimation of 44.8, it places the index further away from the threshold of 50, indicating a division between growth and contraction.
An index measuring output, which contributes to a composite PMI set to be released on Thursday, fell to a nine-month low of 44.9 from 45.8 in August. However, the number exceeded the 44.5 flash estimate.
Cyrus de la Rubia at Hamburg Commercial Bank stated that the Eurozone industrial output is likely to dip by about 1% in Q3 compared to last quarter, and with orders rapidly collapsing there will be another slump at the end of the year.
Despite factories reducing prices, demand experienced its most rapid decline of the year. The output prices index dropped from 51.1 to 49.2, underscoring the ongoing challenges in the manufacturing sector.
Meanwhile, it is anticipated that official data, to be released later on Tuesday, will reveal a decrease in inflation to 1.8% last month, below the European Central Bank’s target of 2.0%. As per a Reuters poll, the ECB, which has already reduced interest rates twice this year, is projected to implement another rate cut in December.
