Overall new order inflows fell at the sharpest rate so far this year, leading retrenchment efforts to continue as manufacturers reduced input purchasing, employment and inventories. In addition, business confidence slipped to a five-month low.

Nevertheless, despite a rapid contraction in sales, prices charged for eurozone goods increased for the first time since April 2023 amid a third consecutive monthly rise in operating costs.

The manufacturing PMI compiled by S&P Global registered 45.8 in August, as was also the case in both June and July, thereby signalling another solid deterioration in operating conditions across the euro area manufacturing sector.

The headline index has registered in sub-50.0 territory on an ongoing basis since July 2022, S&P Global, which compiled the survey data, said in a release.

It was the euro area’s big-two economies Germany and France that provided the strongest drags on aggregate factory performance in August. In both instances, manufacturing conditions worsened.

The only countries that registered growth were Greece, Spain and Ireland, although in the former two, rates of improvement slowed.

Factory performance was dented by a further steep contraction in new orders during August. The decline in total sales was the most pronounced in the year-to-date and broadly in line with that seen on average across the current 28-month period of shrinking demand.

Weaker intakes of new export business were also recorded, with the rate of decline its steepest for eight months.

A sharper downturn in sales placed a greater onus on eurozone manufacturers’ backlogs as a means to support production.

Outstanding business volumes fell at the fastest rate since February. The decline in output slowed slightly and was markedly softer than that for new orders.

Retrenchment and cost-cutting efforts were seen across the survey data in August. Purchasing quantities decreased at a pace that was not only substantial, but also the strongest since April.

For a nineteenth month in a row, the volume of inputs held as stock contracted, while inventories of finished products likewise fell. Rates of decrease did slow in both cases, however.

Meanwhile, factory employment levels within the eurozone were reduced further midway in the third quarter, extending the current run of job cutting to 15 months. Lower staffing numbers coincided with another month in which business confidence weakened.

Overall expectations for output growth in the year ahead were at their weakest since March and below the series long-run average.

For a third consecutive month, eurozone manufacturers reported an increase in their overall input costs. The rate of inflation slowed fractionally but held close to July’s 18-month high.

Despite sharp and sustained contractions in new orders, eurozone goods producers lifted their prices charged for the first time since April 2023. The extent of the increase in selling prices was only modest, however.

Fibre2Fashion News Desk (DS)