Eurozone manufacturing shows signs of stabilisation amid modest growth

Production volumes rose for the fourth consecutive month, supported by stable order books and backlog clearance. New orders stabilised, ending a 37-month decline, while export sales also halted their downward trend, S&P Global said in a press statement.

However, employment continued to fall for the 25th straight month, with input buying and inventories further trimmed. Supplier delivery times lengthened for the first time since January, and purchasing costs dropped for the third month in a row, leading to a slight reduction in output prices.

Country-wise, Ireland (53.7) and Greece (53.1) led growth, followed by Spain (51.4) and the Netherlands (51.2). Germany improved to 49, its best in 34 months, while Austria (47.0), Italy (48.4), and France (48.1) saw deeper declines.

“There are signs of some stabilisation in the manufacturing sector. Companies have now expanded production slightly for the fourth month in a row,” said Cyrus de la Rubia, chief economist, Hamburg Commercial Bank (HCOB). He noted that while uncertainties remain, the cycle may be turning due to necessary upgrades and replacements.

“Encouragingly, four of the eight eurozone countries... are now in expansion territory,” Rubia added, though France, Italy, and Austria are weighing on growth,” added Rubia. “If Germany enters the growth zone, which we believe is likely given the new government's growth package, among other things, these countries could receive a positive boost, as Germany is their most important export destination.”

“A relatively high degree of optimism can be observed among manufacturers. In June, this indicator rose to its highest level since February 2022,” said Rubia, citing strong sentiment in Germany and Spain despite declining confidence in France and Italy.

ALCHEMPro News Desk (SG)