Further declines in purchasing activity and inventories were recorded, while business confidence weakened to a four-month low.

Following a generally benign inflationary environment in the second quarter, July survey data signalled a marked acceleration of cost pressures, as input prices increased at the fastest rate in a year-and-a-half.

Eurozone factories refrained from passing on greater cost burdens to clients, however, as charges for goods leaving the factory gate were broadly unchanged in June.

The PMI, a measure of the overall health of eurozone factories compiled by S&P Global, matched that seen in June, recording 45.8 once again in July.

Albeit unchanged on the month, most of the eight monitored eurozone nations saw manufacturing PMI figures drop compared to June.

Germany and France saw their respective index values drop to three- and six-month lows, respectively. Greece and Spain, which have been the two strongest performers this year so far, also lost growth momentum. Italy and Ireland were the only two countries covered by the survey to see their manufacturing PMI increase, S&P Global said in a release.

For the eurozone as a whole, July survey data indicated a slight acceleration in the factory order downturn that has been ongoing since May 2022. Overall, the pace of contraction was the quickest in three months.

Cross-border sales activity also weighed on demand for eurozone goods at the start of Q3 2024 as evidenced by another solid reduction in new orders from export markets.

To compensate for lower workloads, eurozone manufacturers leaned more heavily on their backlogs as a means to support production.

Outstanding business volumes were depleted at a sharp and quicker rate in July. In fact, the pace of depletion was the fastest since February. Production levels suffered the most marked contraction in the year-to-date.

Net factory employment fell at the start of the third quarter, with workforce numbers decreasing at the fastest pace since last December. This stretched the current sequence of job shedding to 14 months.

Lower staffing capacity coincided with a drop in business confidence, the first time since October last year this has been the case. Overall, expectations for output in the coming year slipped to a four-month low in July.

Eurozone manufacturers trimmed their purchasing activity in July, albeit to a slightly softer extent than in June. Still, the rate of decline was sharp. In turn, pre-production inventories were reduced for the eighteenth month in a row.

The latest survey data signalled a further improvement in supplier performance, but the extent to which delivery times shortened was the weakest in six months.

The PMI data revealed another monthly increase in eurozone manufacturers’ operating costs. The rate of input price inflation quickened to a one-and-a-half-year high, but remained below the long-run trend.

Fibre2Fashion News Desk (DS)