Eurozone manufacturing PMI drops to nine-month low

The final reading of the eurozone manufacturing purchasing managers' index (PMI) showed a print of 45 for last month, the 27th straight month below the 50-point level which separates contraction and growth.

While the PMI was revised slightly higher than the initial estimate of 44.8 released last week, this was still down from 45.8 over the preceding three months and the worst level since December 2023.

Both new orders and output fell at their fastest rates in nine months, while employment and procurement activity also declined at quicker rates. Eurozone goods producers also downwardly adjusted their inventories as business growth expectations fell to a 10-month low.

While HCOB highlighted "pockets of growth" across the southern part of the region – notably in Spain where the PMI rose to a four-month high of 53 – downturns within economic heavyweights such as Germany and France remained firmly entrenched, with PMIs coming in at just 40.6 and 44.6, respectively.

“It is a real shame that Spain is only the fourth-largest economy in the eurozone. While handling the global manufacturing downturn surprisingly well, Spain just does not have enough weight to lift the rest of the eurozone with it," said Cyrus de la Rubia, HCOB's chief economist.

"The worsening industrial slump in Germany, for example, is too big for Spain’s momentum in September to make much of a difference."

De la Rubia predicts a 1% overall drop in eurozone industrial production over the third quarter as a whole, and with incoming orders falling fast, another dip in production is expected before the end of the year.