Manufacturing conditions deteriorate in eurozone in Dec: PMI survey

At 45.1, the PMI posted its thirtieth successive sub-50 reading in the month, dropping fractionally from 45.2 in November to a three-month low.

Last year closed off with accelerated contractions in both new orders and output, while sharp reductions were made to purchasing activity and inventories of inputs.

Factory employment levels also continued on a downward trend, but there was a modest improvement in business confidence as growth expectations hit a four-month high, a release from S&P Global Ratings released.

Factory costs in the eurozone held steady. For a fourth consecutive month in December, prices charged for manufactured goods declined.

December’s results showed considerable divergence. Countries located in the south of the zone continued to outperform, with Spain and Greece showing stronger improvements in manufacturing sector conditions.

Expansions there were more than offset, however, by the big-three of Germany, France and Italy, which all posted deteriorations once again. Most notable was France, which saw its manufacturing PMI sink to its lowest level since May 2020.

Demand for eurozone goods fell once again at the end of 2024. The rate of contraction quickened and was broadly in line with that seen on average across the current 32-month sequence of deteriorating sales.

A softer decrease in new export orders implied that December’s faster drop in new business was domestically driven. Sales to international customers fell at the softest pace in four months in December 2024.

Production volumes continued to decrease across the eurozone manufacturing industry. In fact, December’s drop in output was the steepest since October 2023.

Firms were able to uphold output volumes somewhat. Support came from companies’ backlogs, which declined sharply and at a faster pace when compared to the previous month.

Eurozone factory employment levels remained in contraction, extending the current period of job losses to just over a year-and-a-half. The extent to which workforce numbers fell eased slightly but was nevertheless marked.

Another steep monthly fall in purchasing activity was registered during December last year. Lower input buying came in tandem with another sharp drop in eurozone manufacturers’ pre-production inventories.

December’s reduction in stocks was among the strongest since 2009. Volumes of finished goods held in warehouses also dropped. Prices paid by eurozone manufacturers were unchanged on the month.

Surveyed businesses looked ahead to the future with increased optimism in December, with growth expectations for the next 12 months at their strongest in four months. However, when compared with the series average, business confidence remained subdued.

ALCHEMPro News Desk (DS)