Monday’s survey showed that manufacturing activity in the euro zone remained in deep and widespread contraction last month, Rueters reported.
HCOB’s [Hamburg Commercial Bank] final euro zone manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global fell to 43.4 in September from August’s 43.5, in line with the preliminary estimate. A reading below 50 indicates an activity decline.
The output PMI was well under 50 for the entire third quarter, so we are feeling pretty certain that the recession in manufacturing continued during this period.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says Europe’s leading economies are facing tough times.
“In the race to the bottom, France and Germany are leading the way in the September PMIs. Meanwhile, Spain and Italy are pulling through somewhat less scathed.”
The drop in demand occurred despite record declines in average factory prices, not counting the Great Recession period in 2008-2009.
Policymakers at the European Central Bank, who have failed to bring inflation back to target, may welcome the news of falling prices.
Last month, they raised the key interest rate for the 10th consecutive time. The next rate hike can be expected no earlier than July next year, according to economists polled by Reuters.
