Eurozone Manufacturing Eased in January


Feb. 3 2016, Published 1:49 p.m. ET

Eurozone final manufacturing PMI slowed to 52.3 in January

In-line with the flash estimate, the Eurozone’s manufacturing PMI (purchasing manufacturers’ index) stood at 52.3 in January 2016, down 0.9 points from 53.2 in December 2015.

As Eurozone manufacturing slowed, the iShares MSCI Eurozone ETF (EZU) and the Vanguard FTSE Developed Markets ETF (VEA) fell 3.9% and 4.3%, respectively, over the past month as of February 1. Daimler (DDAIF), STMicroelectronics (STM), and Volkswagen (VLKAY) fell 12.9%, 3.5%, and 12.9%, respectively, over the same period.

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New orders and output grew slowly in January

With a PMI reading at above 50 in January, Eurozone manufacturing has now stayed above the neutral level for 31 consecutive months.

With a slower growth rate in all three big economies in the Eurozone, new orders and production expanded at a moderate pace in January. Growth in Germany, Italy, and the Netherlands moderated, while it stagnated in France and Greece. However, the rate of growth accelerated in Spain, Ireland, and Austria.

The intake of new export orders enabled the expansion of manufacturing in the Eurozone. New export business grew in Germany, Italy, Spain, the Netherlands, and Ireland, but it contracted in France, Austria, and Greece.

After a sustained period of job cuts, headcounts rose in all Eurozone nations. Workforce levels saw faster rates of expansion in Germany, Italy, Spain, Greece, and Ireland.

Cost inflation and selling prices both fall

Price pressures remained on the downside in January. All European nations saw their input prices fall further in January. Germany signaled the strongest reduction, and France signaled the weakest reduction. Regarding sale price, all nations saw falls in output costs.

In January, manufacturing saw moderate growth, with a slower increase in orderbooks and production levels. Even input and output prices fell in the Eurozone, adding to worries. However, rises in employment and the backlog of work provided a positive outlook for manufacturing.

Growth is still occurring at a modest pace. To encourage this momentum, the ECB (European Central Bank) may further extend its stimulus program.

Germany is an influential nation in the Eurozone. In the next article, let’s look at Germany’s manufacturing numbers.


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