Eurozone Manufacturing Sector Stagnates In October

(RTTNews) - Eurozone manufacturing sector stagnated in October, as initially estimated, following a fractional deterioration in September, the purchasing managers' survey compiled by S&P Global showed on Monday.

The final Purchasing Managers' Index posted 50.0 in October, signalling no change in the operating conditions in the manufacturing sector. The score matched the initial estimate and remained above September's score of 49.8.

Factory output expanded for the eighth straight month but the rate of growth was mild. New orders stagnated as orders increased only in the month of August so far this year. New export orders remained a drag on factory sales.

Employment declined in October extending the current sequence of job losses to just shy of two-and-a-half years. The drop was the sharpest since June. Backlogs of work decreased, indicating absent capacity pressures.

Inventory levels decreased in October, extending protracted period of cutbacks to stocks. Pre and post-production holdings were reduced at stronger rates.

Regarding prices, no change in operating costs was signaled by October data after a marginal drop in the prior month. Nonetheless, prices charged by manufacturers increased for the first time since April.

Manufacturers were optimistic towards the year-end ahead outlook for production. The overall level of positivity declined for a second straight month.

"In the eurozone's manufacturing sector, we can at best speak of a very delicate sprout of economic recovery," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"The state of the eurozone's manufacturing sector can be summed up as fragile in Germany, in recession in France, persistently weak in Italy, and showing only subdued growth in Spain," de la Rubia added.

The survey showed the strongest improvement in Spain, while contractions continued in Germany and France and Italy's manufacturing conditions remained broadly unchanged.

Germany's factory activity continued to shrink in October. Nonetheless, the HCOB factory PMI rose marginally to 49.6 from 49.5 in the prior month. The score came in line with the flash estimate.

The ongoing political crisis continued to weigh on the French factory activity and the sector remained stuck in contraction. The final HCOB manufacturing PMI advanced to 48.8 from 48.2 in the prior month. The flash reading was 48.3.

Italy's manufacturing activity broadly stagnated in October as output returned to growth, while overall demand remained subdued. The factory PMI hit 49.9 compared to 49.0 in September.

Spain's manufacturing economy expanded at a faster pace in October amid upturns in both production and new orders. The HCOB factory PMI registered 52.1, up from 51.5 in September.