The Eurozone manufacturing activity continued to decline in September, reaching its lowest point since data collection began in 1997. The final eurozone manufacturing Purchasing Managers’ Index (PMI) dipped to 43.4 in September, matching the preliminary estimate and indicating a contraction in activity below the 50 mark. The output PMI, which is a good indicator of economic health, fell to 43.1 from 43.4. This suggests that the recession in manufacturing persisted throughout the entire third quarter, according to Cyrus de la Rubia, the chief economist at Hamburg Commercial Bank.
France and Germany led the way in September’s PMIs, indicating a race to the bottom in Eurozone manufacturing. Spain and Italy fared slightly better, experiencing somewhat less severe downturns. Despite a rise in the new orders index from 39.0 in August to 39.2 in September, it remained significantly below the breakeven mark. These declines in demand occurred even as factory prices dropped at the fastest rate in the survey’s history, with the three-month average of prices charged by factories decreasing faster than during the 2008/2009 Great Recession.
The falling prices may be welcomed by policymakers at the European Central Bank (ECB), who have been struggling to bring inflation back to target. In their most recent meeting, the ECB raised interest rates for the 10th consecutive time. However, economists predict that the ECB will now maintain a hold on rates until at least July next year.
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