Eurozone manufacturing remains lacklustre in October

The eurozone manufacturing sector remained in a state of near-stagnation in October, as weak demand continued to restrict growth of both output and employment across the currency union.

At 50.6 in October, up from September's 14-month low of 50.3, the final seasonally adjusted Markit Eurozone Manufacturing PMI" registered only marginally above the neutral 50.0 mark. That said, the current sequence above the no-change level was extended to 16 months.

Comment:

Rob Dobson, Senior Economist at Markit said:

"The performance of eurozone manufacturing remained broadly flat at the start of the final quarter, as the sector struggles to recover the traction lost following its mid-year slowdown. Manufacturing is therefore unlikely to provide any meaningful boost to the currency union's anaemic GDP growth.

"Perhaps most worrying is the trend in new orders, a key bellwether of future output growth, which declined for the second month running. It is hard to see any significant near-term boost to performance while market demand remains insipid and beset by lacklustre domestic conditions, slowing export growth and ongoing economic uncertainties.

"National growth disparities also remain a concern, as solid expansions in Ireland, the Netherlands and Spain provide a marked contrast to the downturns in Italy, Greece, France and Austria. The German industrial engine is also achieving only modest growth.

"Not surprisingly, this is forcing firms to focus on cost-cutting and competitiveness, at the expense of employment and margins, as they strive to boost sales volumes. This is likely to hold up the already-high unemployment rates across much of the currency union, as firms lack the profitability and demand requisite to expand capacity."

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