Eurozone manufacturing sector shrinks again

The eurozone manufacturing sector contracted again in November, according to data released on Monday.

IHS Markit’s final manufacturing purchasing managers’ index ticked up to 46.9 from 45.9 in October, coming in ahead of the flash reading of 46.6 but below the 50.0 mark that separates contraction from expansion for the tenth month in a row.

Both output and new orders continued to decline, albeit at a slower rate than October.

Chris Williamson, chief business economist at IHS Markit, said: "A further steep drop in manufacturing output in November means the goods-producing sector is likely to have acted as a major drag on the eurozone economy again in the closing quarter of 2019. The survey data for the fourth quarter so far are indicating a quarterly rate of contraction in excess of 1% for manufacturing.

"Although still signalling a steep rate of decline, the manufacturing PMI nonetheless brings some encouraging signals which will fuel speculation that the worst is over for euro area producers, barring any new set-backs (notably in relation to Brexit and trade wars).

"In particular, November saw the rate of loss of export sales easing further from July’s recent record, helping pull other indicators such as output, employment, order books and purchasing off their recent lows."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The EZ manufacturing sector is still mired in recession, but the PMI has now increased for two months in a row, hinting that the grim 45.7 headline in September marked a cyclical low.

"The headline was lifted by gains small gains in most of the major economies, though the overall background remains one of severe weakness, with the notable exception of France where the PMI edged up to 51.7, from 50.6 in October, trivially higher than the initial estimate, 51.6. The German PMI also was revised a bit higher, to 44.1, though the main message here remains one of recession. Elsewhere, the Spanish index increased to 47.5, from 46.8 last month, while the Italian index fell marginally, to 47.6 from 47.7 in October."