Monday 4 November 2019 9:29 am

Eurozone manufacturing stuck in steepest decline for seven years

The health of the eurozone’s embattled manufacturing sector remained in the depths of a seven-year low last month, with Germany remaining the main point of weakness in the bloc’s economy.

Factory output showed little sign of picking up last month, with IHS Markit’s Eurozone manufacturing purchasing managers’ index (PMI) hitting 45.9 in October.

While the figure is a slight improvement on September’s 45.7, it remains well below the 50.0 no-change mark to indicate a rate of contraction that was the second-sharpest in the past seven years.

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Job shedding also accelerated to its sharpest pace since the start of 2013.

Sustained weakness in output, new orders and purchasing were all signalled in the latest report.

Despite market expectations edging up to their highest point for three months, confidence remained historically low in October.

Export orders tumbled during October “to a considerable degree”, being driven by sharp reductions in both Austria and Germany.

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“Geopolitical concerns, ranging from Brexit to US trade policy, continue to create uncertainty, further dampening demand both at home and in export markets,” said Chris Williamson, chief business economist at IHS Markit.

He added: “The focus of manufacturers remains on cost cutting, reducing inventories and investment spending while also lowering payroll numbers at an increased rate.

“The steeper pace of job losses is especially worrying, as it magnifies the risk of the downturn spilling over into the household sector.”