Purchasing managers’ indices: slowdown continues, especially in the manufacturing sector

The purchasing managers’ indices in the eurozone continued to decline, as shown by the flash results in November. The PMI Composite index, which aggregates sentiment for the eurozone, fell from 53.1 to 52.4 index points.

According to the survey, production growth in the manufacturing industry continued to weaken. The corresponding sub-index fell to its lowest reading in 30 months. The low growth rate is attributable to slower economic momentum worldwide and to growing political and economic uncertainties. Weaker sales figures in the automotive sector are also causing concern among the industry’s purchasing managers. The service sector is more robust, thanks to solid consumer demand, although Markit suggests there are increasing signs of a slowdown.

German purchasing managers appeared to be more sceptical in November. Sentiment in the manufacturing industry as well as among service providers deteriorated. The comprehensive purchasing managers’ composite index thus fell from 53.4 to 52.2 index points, the lowest level in 47 months. The purchasing managers’ index in the service and manufacturing sectors reported weaker growth in business activities and production. Order book growth is negligible and manufacturing export orders are even declining. Companies are also trying to raise sales prices, reflecting the higher input prices, but are having even less success here than before. The German private sector is therefore facing even stronger headwinds in the final quarter of the year.

In France, sentiment among purchasing managers in the service sector remained comparatively robust. The sub-index eased only slightly from October and with an index reading of 55.0 points, the economy clearly continues to expand. In contrast, the sentiment index in the manufacturing sector fell to its lowest level in 26 months. According to the purchasing managers, production here fell for the second consecutive month. Weak demand from the automotive sector was once again held responsible for the decline. All in all, however, the French composite index hardly moved, easing by only 0.1 points to 54.0. Sentiment in the French private sector thus remained at a satisfactory level up to the middle of the fourth quarter.

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