Gloomy European Manufacturing Research from Reuters

The European manufacturing sector is now thought to be firmly in economic recession. This is according to the Purchasing Managers' Index (PMI) for September as measured by Reuters, September 2001, and reported by NTC Research.

Having risen marginally in August, the PMI (an indicator of manufacturing conditions within Europe) fell back to 45.9. This signals the sharpest pace of manufacturing contraction since the survey itself began in June 1997.

Record low PMI readings this month have also been found for Germany, France, Spain, Italy, Ireland and Austria. In line with the individual country surveys, the latest survey has found no evidence that the recent terrorist attacks on the US had any impact on this month's data.

September's sharp fall in the PMI was driven largely by similar marked declines in each of its three components: output, new orders and employment. Having registered a sustained period of growth between February 1999 and April 2001, manufacturing output fell for the fifth month running in September and at the sharpest rate in the survey history as manufacturers across the Eurozone continued to cut output in the face of falling orders.

The survey also indicates that the "New Orders" Index suffered the sharpest contraction of new business in the fifty-two month survey history, and the sixth consecutive month of decline. The weakness of current demand, both within the Europe and in external markets, was widely blamed for the latest fall in order books. Total orders in Austria and Germany fell at the fastest rates during the month. With the exception of Greece, new orders again declined across all of the Euro member countries covered by this survey.

Falling production requirements and the weakness of order books again encouraged manufacturers to run down their inventories of inputs in September. Measured overall, stocks of purchases fell for the sixth month running as a result.

The research also clearly shows that production capacity was again reduced through a further cut in employment. Those companies who reduced their staffing levels in September reported a combination of forced redundancies, natural wastage and the laying off of temporary employees. This has led to the fourth consecutive monthly reduction in the size of the European manufacturing workforce.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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