Factory output slumps as euro slowdown hits

Tim Wallace
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MANUFACTURING business conditions slumped in all four major Eurozone economies in March, survey data showed yesterday, heightening fears of recession across the currency union.

The sector has deteriorated in every month since July 2011, with a fall in new orders hitting March’s purchasing managers’ index (PMI) from Markit.

The index fell to 47.7, down from 49 in February and firmly below the “no change” mark of 50.

German business conditions fell with a PMI of 48.4, down from the slight growth at 50.2 recorded in February, while France also saw a deterioration with a PMI of 46.7.

These represent “further signs that the manufacturing malaise already exhibited at the periphery of the currency bloc was spreading to the core”, Markit said.

The industry worsened further in Italy and Spain, with PMIs of 47.9 and 44.5 respectively, reinforcing forecasts that both were in recession in the quarter.

“Manufacturing is likely to have acted as a drag on economic growth in the Eurozone in the quarter, falling to a lesser extent than in the final quarter of last year but nevertheless failing to prevent the economy sliding back into recession,” said Markit economist Chris Williamson.

“Prospects for April also look poor, with companies reporting steeper rates of decline for both new orders and backlogs of work.”

However the Austrian and Irish manufacturing sectors did manage to improve in March, with PMIs of 51.5 in both.

European manufacturing falls behind