- Prior 48.5
The headline reading is a 4-month low and that comes despite manufacturing output hitting a 10-month high in the euro area. The drag mostly comes from a month-on-month decline in the Suppliers’ Delivery Times Index (which is inverted in the calculation of the headline PMI) surging to a survey-record. As for the more vital components in measuring manufacturing performance i.e. output, new orders and employment, they were all mostly little changed. S&P Global notes that:
“Eurozone manufacturing remains in troubled waters, with factories reporting a fall in demand for goods for an eleventh straight month amid the surging cost of living, tighter monetary policy, a shift to inventory destocking and subdued customer confidence.
“Fortunately, a record improvement in supplier lead times and greater input availability has allowed firms to fulfil orders placed in prior months, meaning output has been broadly flat over the past two months. However, this current level of output is clearly not sustainable, and it is inevitable that production will weaken in the coming months unless order book growth revives.
“In the meantime, the lack of demand has led to a major shift in pricing power away from the seller to the buyer. Lower energy prices are also helping to drive down costs, hence prices paid for inputs by factories are now falling sharply on average, dropping for the first time since demand collapsed in the initial pandemic lockdowns of 2020. These lower costs are feeding through to slower increases in selling prices, which should in turn feed through to lower prices paid for goods by consumers.”
/EUR