Eurozone PMI manufacturing is finalized at 49.3 in Febuary, up from initial estimate of 49.2, but down from January’s 50.5. That’s also the first contraction reading since June 2013. Markit ntoed there were concurrent declines in output and new orders. Also, price pressures continued to soften. Among the countries, Germany PMI manufacturing was finalized at 74-month low at 47.6, Italy at 69-month low at 57.5, Spain at 63-month low at 49.9. Though, France recovered to 3-month high at 51.5.
Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring.
“Most worrying is the downward trend in new orders. Orders are falling at a faster rate than output to a degree not seen for seven years, meaning production is likely to be pared back further in coming months unless demand revives. The new orders to inventory ratio has also fallen to its lowest since 2012, with many companies reporting excess warehouse stocks.
“Spare capacity is consequently developing, which means companies are likely to take a more cautious approach to hiring and investment, and instead focus on cost control.
“The weakening demand environment has meanwhile been accompanied by a marked easing of inflationary pressures to the lowest since late- 2016. Cost inflation has eased, but companies also report a lack of pricing power.
“The downturn is being led by Germany and Italy, but Spain has also now fallen into contraction and only modest expansions are being seen in France, Austria and the Netherlands.
“In addition to widespread trade war worries, often linked to US tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion.”
Also released, Germany retail sales rose 3.3% mom in January, above expectation of 1.9% yoy. Unemployment dropped -21k in February while unemployment rate was unchanged at 5.0%. From Swiss, retail sales dropped -0.4% yoy in January versus expectation of 0.4% yoy. Swiss PMI manufacturing rose to 55.4, up from 54.3 and beat expectation of 55.4.
