Euro area manufacturing deepens contraction in Q3 ’24

The euro area’s manufacturing sector deepened its contraction at the end of the third quarter, according to the latest HCOB PMI survey.

The Eurozone Manufacturing PMI dropped to 45.0 in September from 45.8 in August, signalling a significant deterioration in factory conditions and reaching the lowest level in 2024.

Key indicators such as production, new orders, and employment declined more sharply, while business growth expectations fell to a ten-month low.

Despite pockets of growth in southern eurozone countries like Spain and Greece, where Spain reported a four-month high in manufacturing activity, the overall landscape remains bleak. Germany, the euro area’s largest manufacturing economy, experienced its worst conditions in a year, further exacerbating the downturn.

As demand weakened, factories reduced output and inventories, leading to the fastest drop in new orders since December 2023.

Staffing levels were also cut, with job losses at their steepest since October 2012, excluding pandemic-related months. Interestingly, input costs decreased for the first time since May, and factory gate prices also fell, contrasting with previous months when prices had been raised.

Looking ahead, manufacturers showed a slight optimism about future growth, although sentiment remains the weakest in ten months and below the long-term average.

Attribution: S&P Global

Subediting: M. S. Salama