Eurozone manufacturing outlook remains bleak as contraction worsens

(Sharecast News) - The manufacturing downturn across the eurozone worsened in November, data from S&P Global and Hamburg Commercial Bank (HCOB) confirmed on Monday, with the rate of contraction accelerating in the region's three largest economies. The manufacturing purchasing managers' index (PMI) declined to 45.2 last month, down from 46.0 in October and in line with the flash reading released two weeks ago.

Declines in new factory orders, production, purchasing activity and inventories all worsened, with the sub-indices for all four measures falling further from the neutral 50-point level.

New orders, in particular, have been on the decline for just over two and a half years, with the rate of decline picking up pace in November as sales performances in export markets weakened.

According to the data, November's downturn was centred on the region's three largest economies - Germany, France and Italy - while the Netherlands, Austria and Ireland also saw a contraction in activity. Spain and Greece, meanwhile, continued to report growth, albeit at a slower pace.

"These numbers look terrible. It's like the eurozone's manufacturing recession is never going to end. As new orders fell fast and at an accelerated pace, there's no sign of a recovery anytime soon," said Cyrus de la Rubia, chief economist at HCOB.

De la Rubia said that while official unemployment rates show that joblessness may have stablised at 6.3%, last month's PMI data and proposed cost-cutting plans by companies suggest that conditions will worsen in the coming months.

"When the cycle finally turns, we can expect demand to spike, but that doesn't seem to be happening anytime soon," he said.