- Prior 43.5
The headline reading is a two-month as output also fell amid softer demand conditions. There was also a decline in employment, so just take note of that in case it starts to gather pace in the months ahead. HCOB notes that:
“The Output PMI was well under 50 for the entire third quarter, so we are feeling pretty certain that the recession in manufacturing continued during this period. We probably won't see things picking up until we ring in the new year, but there are reasons to believe that the bottom of the hard-to-pin-down stocking cycle has been reached. According to the PMI survey, stocks of purchased goods have been diminishing since early this year, but the respective index has been hovering around 45 for the last five months. This marked the bottom during the slowdowns which occurred shortly before COVID-19 hit and 2012, before moving upwards again. Being a bit cautious with this, as we’re still seeing rapidly falling input purchasing, but the stocking cycle could soon recover, ready for a manufacturing bounce-back early next year.
“With the exception of the great recession in 2008/2009, output prices have never decreased at a pace faster than the current three-month average, and it’s similar with input prices, which fell almost as fast as when oil prices hit rock bottom in the late-90s and during the bursting of the dot-com bubble in 2001. Given how rare falls of this magnitude are, a rebound seems likely. Thus, we might just see goods deflation packing its bags earlier than we thought.
“In the race to the bottom, France and Germany are leading the way in the September PMIs. Meanwhile, Spain and Italy are pulling through somewhat less scathed. However, if you take the duration of the slowdown into account, considering official monthly production figures, Italy is the worst performer, with its manufacturing sector mired in a recession since the second half of 2022. Italy is followed by Germany, where a recession has started in the second quarter of this year. For France and Spain, we cannot confirm a technical recession yet. Given our forecast that the global manufacturing sector is bottoming out, these countries may be spared from a downturn lasting longer than two quarters.”