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Eurozone PMI manufacturing remains at three-year low

Date: Monday 02 Jul 2012

Eurozone PMI manufacturing remains at three-year low

The final Purchasing Managers' Index (PMI) for the Eurozone's manufacturing sector remained steady at 45.1 points in June, as the preliminary reading was revised higher from 44.8.

Nevertheless, this major leading indicator has been below the 50-point threshold for the last eleven months, indicating contraction in manufacturing activity.

"The Eurozone Manufacturing PMI suggests that the goods-producing sector contracted by around 1% in the second quarter, with this steep rate of decline looking set to accelerate further as we move into the second half of the year. Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years," said Markit chief economist Chris Williamson.

"Producers’ input costs are now falling at the fastest rate for nearly three years, which should help boost profitability and feed through to lower inflation. However, their biggest fear at the moment is slumping demand rather than rising prices, with demand in home markets and further afield being hit by heightened uncertainty regarding the economic outlook as the region’s economic crisis rolls on."

In Spain, PMI manufacturing fell to a 37-month low of 41.1 from the previous month's 42.0.

In Italy, PMI manufacturing fell to a 2-month low of 44.6 from the previous month's 44.8.

In France, PMI manufacturing recovered from a three-year low to 45.2 from 44.7.

In Germany, PMI manufacturing reached a 36-month low of 45.0, down from the previous month's 45.2. It is the fourth consecutive month below 50.

"This manufacturing data is negative as it shows how the European industrial sector continues to slow down, especially in Spain. The poor performance in the periphery is dragging Germany and France lower," said analysts at Digital Look.

FM

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