EMU: PMI Manufacturing Final

Highlights

Eurozone manufacturing lost momentum in November as the PMI slipped to 49.6, returning to contraction territory and reaching a five-month low. The main drag came from a renewed fall in new orders, signalling fresh demand-side weakness after a brief period of stability in October. Export orders continued to decline for the fifth consecutive month, underscoring ongoing challenges in overseas markets. Despite this, production expanded for the ninth month in a row, though the pace was marginal and heavily reliant on clearing backlogs rather than new business.

Labour market conditions softened as job cuts intensified, and firms accelerated reductions in purchasing, inventories and finished goods stock, marking the steepest depletion in over four years. Supply-chain conditions unexpectedly worsened, with supplier delivery times lengthening to the greatest extent since late 2022 due to material shortages and difficulties sourcing items from abroad.

Input costs recorded their strongest rise since March, breaking a year-long pattern of stability, while output prices fell again, reflecting weak pricing power. Performance diverged sharply across the bloc, with Germany and France deepening their contraction, while countries such as Italy, Austria, Ireland, Spain and Greece saw varying degrees of growth. Business confidence improved, offering a cautiously optimistic outlook despite persistent structural pressures. This latest update brings the RPI to minus 8 and the RPI-P to minus 9, indicating that economic activities are now within the expectations for the eurozone economy.

Market Consensus Before Announcement

The consensus sees no revision from the November flash at 49.7, down from 50.0 in the October final.

Definition

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). Released by S&P Global, national data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These countries together account for an estimated 89 percent of Eurozone manufacturing activity.

Description

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

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