Manufacturing downturn deepens as weakness spread across Euro area

Source: Markit

May 21, 2012

The Eurozone manufacturing downturn took a further turn for the worse in April according to Markit Eurozone Manufacturing PMI. The seasonally adjusted Markit Eurozone Manufacturing PMI fell to a near three-year low of 45.9, down from 47.7 in March and below the earlier flash estimate of 46.0. The headline PMI has signalled contraction in each of the past nine months. The April PMIs also indicated that manufacturing weakness was no longer confined to the region’s geographic periphery. The German PMI fell to a 33-month low, conditions deteriorated sharply again in France and the Netherlands also contracted at a faster rate. There was no respite for the non-core nations either, with steep and accelerating downturns seen in Italy, Spain and Greece. Only the PMIs for Austria and Ireland held above the 50.0 no-change mark.

The weak PMI number reflected a drop in Eurozone manufacturing production for the second consecutive month, as new order inflows declined at the fastest pace since December. Austria was the only nation to see production rise in April. Manufacturers reported weak demand from both domestic and export clients – with intra-Eurozone trade volumes also heavily impacted

The deteriorating growth profile of the Eurozone manufacturing sector filtered through to the labour market. Job losses were reported for the third straight month in April, with the rate of decline the sharpest in over two years. Jobs declined slightly in Germany –following a two year period of growth – and the Netherlands. Accelerating rates of decline were seen in France and Italy, while job losses remained substantial in Spain and Greece. The only brighter spots were Austria and Ireland, which both bucked the wider trend to record faster rates of job creation. Evidence of spare capacity remained despite the reduction in Eurozone manufacturing employment.

Learn more about the Markit Eurozone Manufacturing PMI