Brussels, September 2 (financeflashnews.com) – The manufacturing sector in the eurozone continued its decline in August, signaling ongoing challenges in the industry. Demand for goods dropped at the sharpest rate this year, according to revised data from a survey conducted by S&P Global.
PMI Index Shows Continued Weakness
According to final data from S&P Global, the Purchasing Managers’ Index (PMI) for the eurozone’s manufacturing sector, a key indicator of future business activity, remained at 45.8 points in August. This figure is slightly higher than the preliminary estimate of 45.6 points but remains well below the 50-point threshold that separates growth from contraction in the sector.
Performance Across Eurozone Countries
Within the eurozone, only three countries—Greece, Spain, and Ireland—saw positive PMI results, though with some signs of slowing. Greece led with a PMI of 52.9 points, its lowest in eight months. Spain’s PMI dropped to a seven-month low of 50.5 points, and Ireland’s PMI stood at 50.4 points, its highest in six months.
In contrast, other eurozone countries recorded PMI figures below the 50-point mark. The Netherlands hit an eight-month low of 47.7 points, Austria reached a three-month high of 44.4 points, and France’s revised PMI of 43.9 points was better than the initial estimate but still the lowest in seven months. Germany’s PMI of 42.4 points improved slightly from the preliminary estimate, but it remained well below 50 points, marking its lowest level in five months.
Economic Outlook and Challenges Ahead
The survey also revealed that the output sub-index, which is part of the composite PMI and a key indicator of economic health, inched up to 45.8 points from 45.6 in July. This figure marginally exceeded the preliminary estimate of 45.7 points.
“The manufacturing sector is stuck in a rut, with business conditions deteriorating at the same pace for three consecutive months, extending the recession to a grinding 26 months,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. He added that new orders, both domestic and international, are slowing further, dashing hopes of a recovery.
Risks for the European Central Bank
The decline in demand and new orders could pose challenges for the European Central Bank (ECB), which relies on falling manufacturing prices to keep disinflation on track. Inflation in the eurozone dropped to a three-year low of 2.2% in August, bolstering the case for further monetary easing. Analysts predict that the ECB could cut its deposit rate twice more this year, in September and December.
Keywords: eurozone, manufacturing sector, PMI, demand, inflation, European Central Bank, economy, Greece, Germany
