According to data from the Hamburg Commercial Bank's Monthly Survey of Purchasing Managers, produced in cooperation with data firm S&P Global, the euro area manufacturing economy will decline further, falling to 45.7 points in April 2024, and will fall in 4 months. This was a continuous decline. This extended the overall contraction period to 22 months and showed that the sectoral recovery was facing headwinds. Although there are some encouraging signs, including a slight improvement in business confidence and lower operating costs for manufacturers, the overall trend suggests a worsening situation, HCOB said in a Thursday, May 2, press statement. said.
Regional differences
The report finds that trends at the country level differ, with certain regions in the south of the eurozone seeing growth, while countries such as Germany and Austria have seen the decline slow as the overall trend continues to decline. observed. In the Netherlands in particular, the situation in manufacturing improved for the first time since August 2022.
Manufacturing/Sales
Despite efforts to mitigate the impact of the decline in new orders, euro area manufacturers faced a significant decline in production due to accelerating reductions in purchasing volumes. This decline in manufacturing output occurred despite a slight moderation in the rate of decline for the second consecutive month.
Additionally, survey data reveals a significant decline in total sales, especially in new orders from overseas. This increased pressure from export markets contributed to the challenges faced by producers of goods in the euro area.
employment
In response to these challenges, manufacturers dug deeper into their backlogs in April, resulting in continued job losses and extending the duration of job losses. However, the overall rate of decline in employment was modest, the slowest in seven months, HCOB said. Furthermore, euro area factory input costs continued to decline in April, albeit at a slower pace, while invoice prices were reduced for the 12th consecutive month.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, expressed concern about the deteriorating situation in manufacturing in the euro area. “Production is shrinking at a similar pace to last month, and companies are cutting back on purchases at an accelerating pace. Compounding the problem is that the inventory cycle shows no signs of turning around, but rather that April Inventories of both purchased and finished goods continue to be depleted.
He highlighted the absence of demand, which is crucial for manufacturing recovery, and said: “Over the past four months, new orders have plummeted with unparalleled speed, as evidenced by the lack of international support. “There is ample evidence that there is a clear lack of demand.” “This comprehensive snapshot portends that any signs of recovery will be postponed, perhaps until the summer,” Rubia warned.
Rubia also noted disparities between countries, with Spain showing sustained growth while Germany is facing a widespread recession across key sectors. “Recoveries often begin with positive momentum in the capital goods sector. Instead, in a worrying sign, demand for capital goods declined at an accelerating rate in the top three euro economies, leading to a decline in capital goods demand in April. It has been particularly hard hit. [Germany, France and Italy]”
