European manufacturing exercise worsens its disaster and falls to six-month lows | Economy | EUROtoday

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European business has but to emerge from the turmoil, regardless of reducing costs in May. Manufacturing output and new orders plummeted in June for all eurozone nations besides Italy, in accordance with the most recent knowledge from the flash index (PMI), a survey of almost 3,000 buying managers from European firms carried out by S&P Global. The indicator that measures manufacturing output recorded its worst determine because the starting of the 12 months in June with 46.1 factors, a fall of three.2 proportion factors in comparison with May. The survey serves as an early thermometer of the financial local weather. S&P Global classifies any determine above 50 factors as growth in European factories, whereas any determine beneath signifies a recessionary part. The manufacturing PMI, which completes the index on manufacturing output, registered two-month lows. According to the most recent knowledge, it’s deteriorating at the beginning of the summer season and the chance of a recession within the sector is rising.

The manufacturing PMI index, which stands at 45.8 factors this month, analyzes the power of provide, new orders, in addition to employment and supply occasions of round 3,000 European personal sector factories. “Judging by the latest survey, the euro zone manufacturing economy showed new signs of weakness at the end of the second quarter, as the contraction in production accelerated markedly to reach the strongest pace so far this year. “New orders, purchasing activity and employment also decreased at a faster pace, but the outlook for production in the twelve months' time remained positive,” said the statement from Hamburg commercial Bank.

Greece, with 54 points, topped the index in June, although Spain (52.3) and the Netherlands (50.7) have also shown some signs of recovery. It should be noted that all countries, except Italy, are falling. The European community—harmed by weak demand since 2022—continues to be weighed down by Germany and Austria, which have recorded negative figures throughout the year. In addition, manufacturers have warned of a deterioration in conditions in this last month.

“Weaker trends were seen in most manufacturing sectors nationally in June. Greece maintained its position at the top of the manufacturing PMI growth index, despite its respective index falling to its lowest level in six months. Likewise, slower growth rates were recorded in both Spain and the Netherlands. The rest of the euro zone members covered by the study saw worsening industrial conditions at the end of the second quarter. Except in the case of Italy, the contraction rates were stronger than in May. Germany's manufacturing sector once again recorded the worst result in the euro zone, as has happened uninterruptedly since last February,” explains the German bank in its joint survey with S&P Global.

For Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, these latest results are worrying, especially for Germany, the country with the largest GDP in the eurozone. The manufacturing giant has shown the worst performance in the index since February, largely due to its exposure to the motor industry. The economist has warned of the danger of a recession in Germany, Austria, France and Italy, despite their improvements. “It is quite depressing to see that the forward indicator of new orders is falling at an accelerated pace. This fall occurs after a record period of twenty-five consecutive months of falling demand, with a slight illusion that the situation was improving in May, when its respective index showed some increase. This means that any significant recovery will probably be postponed at least until late summer or early autumn,” he notes in a word.

“Germany has not managed to shake off its position as the worst-performing eurozone country,” Rubia said. “It is rather depressing that new orders for the future are falling at an accelerated pace. This means that any significant recovery will probably be postponed until at least the end of summer or the beginning of autumn.” However, one positive sign of recovery, according to the economist, is that many firms have managed to pass on their input costs to the customer.

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https://elpais.com/economia/2024-07-01/la-actividad-manufacturera-europea-agudiza-su-crisis-y-cae-a-minimos-de-seis-meses.html