Factory Activity in Euro Zone Continues to Experience a Steep Downturn

2023-10-02 16:07:28

Euro zone factory activity stuck in steep downturn

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A steel worker of ThyssenKrupp walks in front of a blast furnace at a ThyssenKrupp steel factory in Duisburg, western Germany, November 14, 2022. REUTERS/Wolfgang Rattay/File Photo

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Euro zone factory activity stuck in steep downturn

Euro zone manufacturing activity remained stuck in a deep and broad-based downturn in the previous month, with demand continuing to shrink at an alarming pace not seen since 1997.

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Euro zone manufacturing PMI at 43.4

The euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, dropped to 43.4 in September compared to the previous month's 43.5. This reading indicates a contraction in activity.

Output index falls to 43.1

The index measuring output, a key gauge of economic health, fell to 43.1 from 43.4, contributing to the ongoing recession in manufacturing, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

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France and Germany lead the downturn

In the September PMI, France and Germany were at the forefront of the downturn, while Spain and Italy fared slightly better.

New orders index improves but remains below breakeven

Although the new orders index rose to 39.2 from the previous month's 39.0, it still remained below the breakeven mark, indicating continued weakness in demand.

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Falling prices fail to boost demand

Despite falling prices charged by factories, the downturn in demand persisted. Prices decreased at a rate not seen since the 2008/2009 Great Recession, according to HCOB's de la Rubia.

European Central Bank may welcome falling prices

Policymakers at the European Central Bank, who have been struggling to achieve their inflation target, might find some relief in the news of falling prices.

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Interest rates likely to remain on hold

Following a 10th consecutive interest rate hike last month, the ECB is expected to keep rates unchanged until at least July next year, according to economists in a Reuters poll.

Reporting by Jonathan Cable; Editing by Hugh Lawson

Our Standards: The Thomson Reuters Trust Principles.

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