- Prior 46.5
Even with the headline reading dipping to a three-month low, there are some good news from this report. Of note, output and new orders are seeing much softer declines, at levels seen during early 2023. Meanwhile, business confidence also rose to its highest in nearly a year. However, growth expectations remain weak and employment conditions are also stuttering a little. HCOB notes that:
"It’s a bit disheartening: over the last eight months, the manufacturing industry has been gradually climbing the Output PMI ladder, but it still finds itself on the basement staircase. However, progress to the next floor has yet to materialise, largely owing to the underperformance of the German and French industries. Given this, it comes as no surprise that our GDP nowcast model, incorporating PMI data, predicts a continuation of the recession in the manufacturing sector of the eurozone.
"The eurozone's manufacturing sector usually runs on several cylinders, mainly the Euro-4 countries of Germany, France, Italy and Spain. Together they account for three quarters of the eurozone's manufacturing industry. We currently have the unusual situation that two cylinders, Germany and France, are more or less out of action. Italy and Spain, on the other hand, started to pick up again in March and February respectively, according to the PMI. So far, however, this is not enough to bring the eurozone as a whole back into growth mode. A sustainable economic turnaround can only be expected once all cylinders are back in motion.
"In the first quarter, the pace of the decline in incoming orders slowed considerably. However, there are still significantly fewer orders coming in than in the previous month. It is therefore to be expected that the industry is on the verge of surpassing the longest contraction spell for incoming new orders in the survey history, which was 25 months during the euro crisis in 2011 to 2013. This does not speak for a quick turnaround in activity."
