- Prior 50.0
The headline reading is a five-month low with the output index declining to a nine-month low. That sees the euro area post a contraction in the manufacturing sector again as new orders in particular reflect a drop. Business confidence did pick up however but employment conditions did suffer as job losses picked up by the sharpest since April. HCOB notes that:
“In terms of the number of countries in which industry is growing again, the outlook for the eurozone looks quite reasonable. Of the eight countries in which Manufacturing PMIs are recorded, a clear majority of six countries are showing a positive economic picture. However, when the sizes of these economies are taken into account, the situation looks completely different, as it is the two largest economies whose industries slipped even deeper into recession in November. In France, this is probably due to the continuing political uncertainty, which is causing many companies to hold back on investment decisions. In Germany, a large part of the economy appears to be disappointed with the federal government's course of action to date, and a dangerous sense of resignation regarding the country's ability to reform may be taking hold. However, we believe that visible investments in infrastructure could soon revive the mood. The current picture of the eurozone is sobering, as the manufacturing sector is unable to break out of stagnation and is even tending towards contraction.
“In search of rays of hope, there are some notable developments. Spain's industry is escaping the downward pull of the major eurozone economies and has remained in growth territory for the seventh month in a row. Although Italian factories are not showing any particular momentum, they are at least growing after a contraction in September and a stagnation in October. It is encouraging to see that manufacturing order intakes have risen in these two southern European countries. This suggests that production will continue to expand here in the coming months.
“Most companies in the eurozone are confident that they will be able to expand their production in the next twelve months. In this regard, the mood in Germany has improved somewhat, and in France there has even been a shift from pessimism to optimism. If one believes the saying that “half of economics is psychology,” then this increased confidence is an indication that things will improve in the coming year.”
