Despite the headlines dropping to a three-month low, there is some good news from this report. Notably, the decline in production and new orders has slowed considerably compared to levels at the beginning of 2023. Meanwhile, business confidence rose to the highest level in almost a year. However, growth expectations remain weak and the employment situation is somewhat stagnant. HCOB points out:
“It's a little disappointing. Over the past eight months, manufacturing has gradually climbed the output PMI ladder, but still finds itself on the basement stairs. But progress to the next floor is mainly due to That hasn't happened yet.Given this, it's no surprise that our GDP nowcast model, which incorporates PMI data, predicts a continuation of the eurozone manufacturing recession.
“Eurozone manufacturing typically operates on multiple cylinders, with the Eurozone's four countries – Germany, France, Italy and Spain – together accounting for three-quarters of the eurozone's manufacturing. Currently. France is more or less inactive, while Italy and Spain started to pick up again in March and February respectively, according to PMI. So far, it has not been enough to turn the eurozone into an economic zone, and a sustainable economic turnaround can only be expected once all cylinders are firing again.
“In the first quarter, the pace of decline in orders slowed significantly. However, orders are still significantly lower compared to the previous month. Therefore, the industry is expected to continue to maintain momentum beyond the longest period. ” Historically, the period of contraction in new orders was 25 months during the euro crisis from 2011 to 2013. This does not indicate a rapid turnaround in activity. ”
