Eurozone manufacturing slump shows signs of stabilising in October, PMIs show

EUROZONE’S manufacturing sector showed some signs of stabilisation in October. While activity contracted for a 28th month, it did so at a shallower pace, according to a survey which showed an ongoing decline in demand had also eased.

HCOB’s final eurozone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 46 in October, ahead of a 45.9 preliminary estimate but still below the 50 mark separating growth from contraction.

An index measuring output, which feeds into a composite PMI due on Nov 6, seen as a good guide to economic health, jumped to 45.8 from 44.9 in September and was ahead of the 45.5 flash estimate.

“There is one bit of good news in these numbers: the recession in the manufacturing sector did not deepen further in October,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“Production dropped at a slower pace than in the previous month, and new orders fell less sharply.”

The new orders index, a measure of demand, bounced to a four-month high of 44.2 from 42.2, albeit still signalling a decline.

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That came as factories reduced their prices at the fastest rate since April, in part justifying the European Central Bank’s ongoing policy-easing cycle.

The ECB cut interest rates last month for the third time this year, saying inflation in the eurozone was increasingly under control, and is expected to do so again in December.