Euro zone manufacturing activity contracted sharply last month and a further decline in demand likely ended any hopes of an imminent recovery after the sector showed some signs of stabilizing in October, according to a survey.
The final HCOB euro zone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 45.2 in November, matching a preliminary estimate and falling further below the 50 mark that separates contraction growth.
In October, this index was 46.0 and the figure has remained below 50 since mid-2022.
An index that measures production fell from 45.8 in October to 45.1 in November
“These numbers look terrible. It appears that the recession in the euro zone’s industrial sector will never end. As the volume of new orders fell quickly and at an accelerated pace, there is no sign of recovery anytime soon,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The slowdown is widespread, affecting all three main eurozone countries. Germany and France are doing worse, and Italy is not doing much better.”
As overall demand has fallen despite manufacturers cutting their prices, factories have cut headcount at the fastest rate since the Covid-19 pandemic. The employment index fell from 46.2 to 45.2, its lowest value since August 2020.
Foreign demand – including trade between euro zone nations – has also contracted more quickly and is likely to get worse as US President-elect Donald Trump, who returns to the White House in January, has proposed a 10 % on all imports, which would make European products more expensive there and therefore less desirable.
Such a tariff would have a significant impact on the bloc’s economy over the next two or three years, according to a strong majority of economists interviewed by Reuters last month.
