New NTC Research on European Manufacturing
August 3 2001
The manufacturing economy within Europe is believed to be contracting at its fastest rate since December 1998, when the sector was hit by the global financial crisis. This is according to the newly-released Reuter's Eurozone Manufacturing Purchasing Managers' Index for the month of July.
The NTC research data used within the Index recorded 47.3 in July, down from 47.9 in June. This represents the fourth consecutive month in which the Index has recorded a level below the critical no change mark of 50.0.
Some of the key points from the Index are:
- Falling output, employment and stocks of purchases together with a further improvement in suppliers' delivery times have continued to drag the Index below the 50.0 line.
- Declining new orders, which fell at the fastest rate since November 1998, had the most detrimental impact on the Index.
- Manufacturers reported a fall in the volume of incoming new orders for the fourth month running in July. Moreover, the rate of contraction of demand continued to increase to reach the fastest for just over two-and-a-half years, as uncertainty with regard to the future performance of the global economy heightened.
- Weaker demand, in turn, prompted manufacturers to adjust down production levels for the third consecutive month in July. Output also declined at the sharpest rate since December 1998.
- Given these conditions, European manufacturers reduced employment levels for the second month in succession in July. Moreover, a drop in the Index from 49.5 in June to 49.1 in July is thought to signal a marginal rise in the rate at which manufacturers shed staff.
- Expectations of a further deterioration in economic conditions have also led firms to cut back stocks of purchases again in July. Stocks fell for the seventh time out of the last eight months in July and at a rate identical to June's four-year survey high.
- At the same time, suppliers have again been able to improve lead-times. In fact, delivery times improved at the fastest rate for just over two-and-a-half years.
An NTC analyst commented, "The impact of the US led slowdown on the Eurozone manufacturing economy has become increasingly apparent, with Euroland industrial production recording its first contraction in May. The Index, which fell to its lowest level since the emerging markets crisis in late 1998, suggests this downturn will intensify over the coming months."
All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
