Eurozone manufacturing contracted further at the end of 2023
Nigel Davis
02-Jan-2024
LONDON (ICIS)–Manufacturing in the eurozone remained in contraction in December 2023 with purchasing managers indices (PMIs) reflecting steep declines in output and employment but an easing of falls in demand and purchasing.
Some of the manufacturing sector sub-indices suggested that the worst of the industry’s slump had passed, with contraction in new orders and purchasing activity easing, Hamburg Commercial Bank (HCOB) and the index complier S&P Global said. Business confidence was at an eight month high.
The HCOB Eurozone Manufacturing PMI rose slightly to 44.4 from 44.2 in November to reach a seven month high. The HCOB Eurozone Manufacturing PMI Output Index dropped to 44.4 from 44.6 in November, to a two month low.
“The sluggishness of new orders echoes the
gloom, retreating almost as swiftly as the
previous month,” commented, HCOB chief
economist, Cyrus de la Rubia.
“Our Nowcast model aligns with this pessimistic trend, strongly suggesting a contraction in GDP for the fourth quarter. If this holds true, it paints a bleak picture for the eurozone and would mean that the eurozone entered a recession in the third quarter.”
“The destocking process is showing no signs of letting up. Stocks of purchases are shrinking at an accelerated pace and for the eleventh straight month, surpassing the rate observed in the previous month. The pivotal turning point in the inventory cycle is a key factor for initiating a recovery. Our projection places this anticipated shift in the first half of 2024, although the present indicators do not yet support this expectation,” de la Rubia added.
More companies are expressing optimism as regards to their output over the next 12 months, however. The HCOB economist suggested that this optimism could be rooted in the anticipation of a potential decline in interest rates and lower energy prices.
Thumbnail image source: Shutterstock
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