UK PMI Manufacturing recovered to 48.3 in September, up from 47.4 and beat expectation of 47.0. However, Markit noted that downturn continues as rate of jobless accelerated to the worst level since February 2013. New orders and output also fell further. But purchasing and input stocks rose as Brexit preparations restarted.
Rob Dobson, Director at IHS Markit, which compiles the survey:
“The UK manufacturing downturn continued in September, adding to signs that the sector may be sliding into recession. Output, new orders and employment all fell further as rising political, trade and economic uncertainties exacerbated concerns about Brexit.
“Some manufacturers noted increased inventory building activity in preparation for the forthcoming exit date, but the impact of such Brexit-related stock building was dwarfed by weakening demand for other customers, due in part to clients routing supply chains away from the UK.
“The rate of job losses accelerated to a six-and-a-half- year high, highlighting how manufacturers are increasingly seeking to cut costs. Similarly, the investment goods sector was especially hard hit in September, seeing the sharpest drops in production and new business, as clients reined in capital spending while conditions remained volatile.
“The shroud of uncertainty also weighed on manufacturers’ confidence, which remained at one of its lowest ebbs in the survey history. These headwinds all ensure that manufacturing will likely remain a drag on UK economic growth during the months ahead.”
Full release here.
Eurozone PMI composite finalized at 50.1, GDP to rise 0.1% in Q3 at best
Eurozone PMI Services was finalized at 51.6, down from August’s 53.5. PMI Composite was finalized at 50.1, down from August’s 51.9. That’s the lowest level since June 2013. Looking at the member states, Germany PMI Services dropped to 48.5, an 83-month low. Italy rose to 2-month high of 50.6. France hit 5-month low of 50.8. Ireland hit 78-month low of 51.0. Spain also hit 2-month low at 51.7.
Chris Williamson, Chief Business Economist at IHS Markit said:
“The eurozone economy ground to a halt in September, the PMI surveys painting the darkest picture since the current period of expansion began in mid-2013. GDP looks set to rise by 0.1% at best in the third quarter, with signs of further momentum being lost as we head into the fourth quarter, meaning the risk of recession is now very real. Inflows of new business are falling at the fastest rate for over six years and employment growth has hit the lowest since early 2016. Companies are increasingly looking to reduce overheads and tighten belts in the face of falling demand and an uncertain outlook.
“The downturn also shows further signs of spreading from manufacturing to services. While the goods-producing sector is stuck in its deepest downturn since 2012, the service sector has also seen its growth rate slow sharply to one of the weakest for six years.
“The deteriorating picture is being led by a downturn in Germany, but France and Italy are also close to stalling and Spain has seen growth slow to the joint-lowest in around six years.
“The growing risk of recession, coupled with a further moderation of inflationary pressures, will add to expectations that the ECB will need to do more to stimulate the economy in coming months.”
Full release here.