Eurozone manufacturing crisis deepens as Germany and France struggle
The Eurozone's industry remains in recession, with a continuous decline in production in most surveyed countries. The Eurozone Manufacturing PMI, published by S&P, remained at 45.8 points, indicating a deepening crisis in the manufacturing sector.
According to the latest S&P Global report, the industrial sector in the Eurozone continues to face serious difficulties. Although the Manufacturing PMI achieved a higher result than expected, it remains below the threshold of 50 points. As of last month, it was 45.8, compared to the expected 45.6. Analysts point out that a particularly worrying situation exists in Germany and France, the largest economies in the region.
Decline in orders and production
The S&P Global report points to a significant decline in new orders in the Eurozone's industrial sector. Analysts emphasise that this is the worst result since the beginning of the year. The decline in export orders is particularly severe, reaching the highest level in eight months.
Companies have been forced to cut production in response to dwindling orders. The report indicates that despite this, the decline in output was less than in orders, suggesting that companies are trying to maintain a certain activity level.
Cost-cutting and pessimistic forecasts
In the face of a problematic situation, companies in the Eurozone are undertaking a range of cost-saving measures. S&P Global analysts note that reductions have affected both purchases and employment.
Moreover, business forecasts for the coming year are the most pessimistic since March. The report highlights that the forecast index has fallen below its long-term average.
An interesting phenomenon observed in August was the increase in sales prices despite the ongoing decline in orders. S&P Global analysts highlight this is the first case since April 2023, although the rise was moderate.
The rise in purchase prices has been sustained for the third consecutive month, which may challenge the European Central Bank in its fight against inflation.
Varied situation in different countries
The S&P Global report ranks Eurozone countries based on the Manufacturing PMI. Analysts state that Greece, Spain, and Ireland are the only countries that recorded growth, although the pace of growth has slowed for the first two.
At the other end of the scale are Germany and France, where the situation in industry has further deteriorated. This is a worrying signal for the entire Eurozone economy.
