European Manufacturing Production Rose First Time Since May 2022

European countries manufacturing PMIs in February remained in contraction (actual 48.5; prior 48.8) S&P Global flash indices show. Manufacturing production increased for the first time since May 2022, though fractionally. We continue to see mostly milder contractions but ongoing contractions, nonetheless. On a separate note, the European Central Bank began reducing holdings in its Asset Purchase Program portfolio today.

With ongoing aggressive ECB rate hikes 2023 faces further downside across these metrics that still are not reflecting a fraction of the lagging impact of tightened monetary policy.

Europe Manufacturing Map

Europe and UK Manufacturing PMI February 2023 

  • Eurozone’s February Manufacturing PMI 48.5, (expected (last 48.8)
  • Final Eurozone Manufacturing Output Index at 50.1 (Jan: 48.9). 9-month high.
  • Germany’s February Manufacturing PMI 46.3 (expected 46.5; last 46.5).
  • France’s February Manufacturing PMI 47.4 (expected 47.9; last 47.9)
  • Italy’s February Manufacturing PMI 52.0 (expected 51.0; last 50.4)
  • Spain’s February Manufacturing PMI 50.7 (expected 49.1; last 48.4)
  • Swiss February PMI 48.9 (expected 50.4; last 49.3)
  • U.K.’s February Manufacturing PMI 49.3 (expected 49.2; last 49.2).

Manufacturing production volumes across the euro area broadly stabilized in February, ending an eight-month sequence of contracting output. Manufacturers in Italy, Greece and Spain lent the greatest support to factory output across the euro area in February.

According to survey respondents, easing supplier bottlenecks and improved raw material availability reduced the strain on production schedules. Indeed, supplier delivery times shortened to the greatest extent since May 2009. Consequently, cost pressures faced by goods producers eased considerably once again, with the overall rate of input price inflation slowing to a marginal pace that was the weakest in almost two-and-a-half years.

  • German S&P Global Manufacturing PMI Dec P: 47.4 (est 46.3; prev 46.1)
  • German S&P Global Composite PMI Dec P: 49.0 (est 46.3; prev 46.2)
  • German S&P Global Services PMI Dec P: 48.9 (est 46.5; prev 46.3)

Comments on Europe

Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“A marginal expansion of output reported by Eurozone manufacturers in February is welcome news in
representing the first increase since last May and a further improvement in the underlying trend from the low seen back in October.

“The brighter production picture first and foremost reflects a broad-based improvement in supply chains, with deliveries of inputs into factories quickening on average to a degree not seen since 2009. Fewer supply shortages and delays have facilitated higher output, allowing companies to deal with backlogs of work accumulated during the pandemic.

“Unfortunately, inflows of new orders continued to fall at a marked rate, reflecting persistent weak demand as customer spending remained subdued. Inventory reduction policies also led to falling demand for manufactured inputs.

“Demand will therefore need to rise further in the coming months if production growth is to be sustained, breaking the reliance on backlogs of work.

“In the meantime, the combination of improved supply and sustained weak demand – as well as lower energy prices – is helping bring inflationary pressures down sharply, with raw material input costs barely rising in February to signal the slowest rate of increase for around two-and-a-half years. Although factory selling prices continued to rise sharply, albeit with the rate of increase easing to a twoyear low, this in part reflects the usual lagged effect of changes in costs feeding through to output prices.”

About the Report

The Global Report on Manufacturing is compiled by IHS Markit based on the results of surveys covering over 13,500 purchasing executives in over 40 countries. Together these countries account for an estimated 98% of global manufacturing output2 . Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.

Source: S&P GlobalMarkets

From the TradersCommunity News Desk