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The eurozone's manufacturing sector experienced continued decline in August, as the regional purchasing managers' index (PMI) remained below the neutral 50-point threshold for the 26th consecutive month. The Hamburg Commercial Bank (HCOB) eurozone manufacturing PMI, compiled by S&P Global, registered at 45.8 for the month, revised upward from the preliminary estimate of 45.6, matching the levels observed in June and July.
According to HCOB, manufacturers within the eurozone remained under significant strain, with declines in factory output affecting most of the countries surveyed. The ongoing contraction in the manufacturing sector, indicated by readings below 50, has persisted since July 2022.
The report highlights that new order inflows dropped sharply in August, marking the steepest decline of 2024 thus far. This led to continued cutbacks in input purchasing, employment, and inventories by manufacturers. Additionally, business confidence decreased to a five-month low.
A notable development in August was the increase in selling prices, marking the first rise since April 2023. This upward trend in prices could pose challenges for the European Central Bank, which is already grappling with persistent inflationary pressures in the services sector.
The PMIs for the eurozone's largest economies, Germany and France, were revised upward from initial estimates but still indicated deteriorating conditions. Germany's PMI fell to 42.4 from 43.2, while France's PMI declined to 43.9 from 44.
Among the 20 eurozone member states, only Greece, Spain, and Ireland reported growth. However, growth rates in Greece and Spain slowed compared to previous months.
Cyrus de la Rubia, Chief Economist at HCOB, remarked on the worsening situation, noting that both domestic and international new orders are declining further, diminishing any short-term prospects for a rebound. He also pointed out that input prices have been increasing since June, adding to the economic challenges faced by the region.
