- Prior 50.7
It's a positive revision but still reaffirms a drop in manufacturing activity to wrap up Q3. The headline reading and output are both at two-month lows as new orders struggled, falling at its quickest pace in six months as business confidence also struggles. The good news at least is that price pressures were seen declining further with both s both input costs and output charges declining marginally. HCOB notes that:
“For the seventh month in a row, production in the Eurozone has ticked upwards compared to the previous month, but progress has been sluggish. There is no clear sign that things are about to pick up speed anytime soon. Incoming orders dipped slightly and mostly flatlined through spring and summer. As a result, companies continued trimming staff and cutting down inventory levels in September.
“The drop in the PMI is showing up across the board, with respective figures for consumer goods, capital goods and intermediate goods all down on the month. Especially in the latter two, we’re seeing a break in the upward trend that started late last year and had pushed both sectors into growth territory by August. The consumer goods sector, which had been relatively stable compared to the others, might take a hit from the new 100% U.S. tariffs on pharmaceuticals.
“The stagnation observed in the manufacturing sector can also be viewed positively. Considering the headwinds like U.S. tariffs, political uncertainty in France and Spain (where both governments are under fire), Germany’s rocky start with its new administration, and broader geopolitical tensions, Europe’s industrial sector is holding up surprisingly well. It is showing resilience. Still, the longer reforms are delayed and the business environment stays unfavourable due to high energy costs and red tape, the harder it gets for companies to stay profitable and competitive. Against this backdrop it is not a surprise that confidence among businesses is lower than the average of the past ten years.
“In mid-sized Eurozone economies like the Netherlands and Spain, manufacturing is actually growing. Meanwhile, in the big three, Germany, France, and Italy, the recession that started back in 2022-2023 is easing but has not fully ended. Germany’s manufacturing sector outlook for next year is looking up, backed by a recent report from leading economic institutes projecting 1.6% growth in this sector. France manufacturers, on the other hand, face a more subdued outlook, largely due to its fragile government, which could soon stumble over the 2026 budget.”
