02.10.202313:13:00UTC+00Eurozone Manufacturing Sector Stuck In Deep Contraction

The euro area manufacturing activity remained in the deep contraction zone in September on account of considerable weakness in new orders and accelerated fall in jobs, the purchasing managers' survey results from S&P Global showed on Monday.

Meanwhile, official data released on Monday suggested that the unemployment rate dropped to record lows in August indicating the resilience of the labor market.

The HCOB manufacturing Purchasing Managers' Index, or PMI, fell to 43.4 in September from 43.5 in August, final data from S&P Global showed. The score has remained below the crucial 50.0 mark for the fifteenth straight month signaling a sustained deterioration in the health of the manufacturing sector.

Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said it is pretty certain that the recession in manufacturing continued in the third quarter. "We probably won't see things picking up until we ring in the new year," the economist said.

New orders received by manufacturers logged a rapid decline, which was the steepest in the 26-year survey history. In response to falling demand, they reduced production level slightly faster than in August.

Due to the absence of demand pressure, there was further progress on backlogs of work. Consequently, manufacturers reduced employment at the quickest rate in nearly three years.

Purchasing activity was lowered for the 15th consecutive month in September. Further, stocks of inputs posted an accelerated decline. Likewise, post-production inventories dropped at the quickest pace in two years.

Operating expenses decreased at the slowest pace since April. In order to remain competitive, firms reduced their output prices for the fifth straight month.

There was a marked softening of growth expectations as business confidence slumped to a ten-month low.

Germany continued to log the fastest rate of decline, followed by France. Although Italy and Spain registered worsening activity, the rates of deterioration slowed.

The German manufacturing sector remained firmly in the contraction territory. The factory PMI registered 39.6 in September, up from 39.1 in August. The score was below the flash reading of 39.8. France's manufacturing activity slid deeper into contraction in September, with production and new orders falling at one of their sharpest rates in almost three-and-a-half years. At 44.2, the factory PMI was down from 46.0 in August. The initially estimate score for September was 43.6.

Declines in production and new orders drove Italy's manufacturing downturn in September. The factory PMI posted 46.8, up from 45.4 a month ago. The decline was the least marked since early 2023.

Spain's manufacturing activity registered concurrent falls in both output and new orders. The PMI rose to 47.7 in September from 46.5 in August. The sector contracted for six successive months.

Official data showed that the unemployment rate in the 20-nation currency bloc dropped in August to a joint record low last seen in June.

The jobless rate fell marginally to 6.4 percent from 6.5 percent in July. In the same period last year, the rate stood at 6.7 percent. The rate also matched expectations.

Data showed that unemployment decreased by 107,000 from July to 10.856 million. Compared to last year, joblessness fell by 407,000.

The youth unemployment rate eased slightly to 13.8 percent from 13.9 percent in the previous month.