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Eurozone manufacturing shrinks for first time since 2013

Staff Writer | March 1, 2019
Eurozone manufacturing activity deteriorated in February with the sector shrinking for the first time since June 2013.
Eurozone manufacturing
Europe   IHS Markit's flash estimate for February was 49.2
The Eurozone manufacturing purchasing managers' index fell to 49.3 in February from 50.5 registered in January. This was a bit better than IHS Markit's flash estimate for February was 49.2 but still was below the line of 50 that divides expansion from contraction.

By market group, weakness was most apparent in the intermediate and investment goods sectors. Both recorded deteriorations in operating conditions compared to the previous month, IHS Markit said. In contrast, consumer goods continued to expand, albeit at the weakest pace since July 2016.

Among the countries covered by Friday's manufacturing reading, Germany and Italy registered the worst in February. Germany's PMI score fell to 47.6 points last month from 49.7 registered in January, in line with expectations, while Italy's edged down to 47.7 from 47.8.

Meanwhile, growth improved slightly in France, but remained historically weak, with the manufacturing PMI increasing to 51.5 in February from 51.2 in January, improving on the flash PMI reading of 51.4.

According to IHS Markit, a challenging international climate, characterised by political and trade uncertainties, meant that eurozone export orders fell a fifth successive month and to the greatest degree for over six years.

Despite the marginal fall in output, evidence of spare capacity in the manufacturing economy continued to build. Inventories of finished goods were higher for a fifth successive month, albeit only slightly and to a considerably lesser degree than the survey reading in January.

Although production, new orders and backlogs all continued to fall, manufacturers continued to take on workers at a solid pace during February.

Meanwhile, input price pressures continued to weaken during February. Led by lower prices paid for oil-based products and reducing supply-side constraints, input costs rose at the slowest pace since October 2016.


 

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