Eurozone manufacturing shrinks again as Germany struggles
Eurozone manufacturing activity contracted for the third month running in April as conditions worsened in Germany.
The IHS Markit purchasing managers index inched up to 47.9 from March’s near-six year low of 47.5. A figure below 50 indicates that activity is contracting.
The biggest decline was again in capital and intermediate goods while consumer goods expanded. The region’s malaise was led by Germany, whose large manufacturing sector is in recession. Italy and Austria also recorded contractions while Greece was the biggest improver with solid gains in Ireland, the Netherlands and Spain.
There was a sharp contraction in new orders and exports remained a source of demand weakness. Production fell for the third month running and purchasing declined for the fifth straight month.
Chris Williamson, IHS Markit’s chief business economist, said: “The manufacturing sector remained deep in decline at the start of the second quarter … The April reading was the second-lowest seen over the past six years, signalling a deterioration of overall business conditions for a third successive month.
“The surveys continue to see widespread concerns over weak global demand as well as reports of businesses struggling amid rising trade protectionism, Brexit and the subdued auto sector."
Williamson said declining production meant manufacturing was likely to be a major drag on the wider economy in the second quarter. Reduced backlogs of work mean manufacturers will seek to cut costs and exercise caution when it comes to hiring workers, he added.