Manufacturing at seven-year low in Eurozone opening Q4
Manufacturing activity in the Eurozone began Q4 2019 much as it ended the Q3, with deep contraction seen in factory output during October. The fall was for the ninth successive month. Manufacturing in the Eurozone accounts for between 10% and 20% of GDP, depending on the country.
The Purchasing Manager’s Index (PMI) for the month was flat, with September at 45.7 points, remaining at a seven-year low – which hasn’t been seen since the height of the sovereign debt crisis in the 19-country currency area.
The Eurozone economy started Q4 close to stagnation, with the flash PMI pointing to a quarterly GDP growth rate of just under 0.1%, according to IHS Markit, which compiles the Index.
The manufacturing downturn remains the fiercest since 2012, and continues to infect the service sector, where October saw the smallest increase in new work for almost five years.
By country, business activity fell for a second successive month in Germany to mark the worst period of decline since 2012. In contrast, business activity picked up in France, registering the third-largest expansion of output over the past 11 months.
Exports were the key divergence between France and Germany, with the former recording modest growth in new business from abroad, while Germany’s exports remained in steep decline.
The survey also indicated that Mario Draghi’s tenure at the helm of the European Central Bank ends on a note of near-stalled GDP, slower jobs growth, near-stagnant prices and growing pessimism about the outlook. This is piling pressure on the incoming chief, Christine Lagarde, to drive new solutions to the Eurozone’s renewed malaise. Lagarde is the former International Monetary Fund head and will take over from 1 November.
