Eurozone manufacturing sector nears stagnation: Report

By Gokhan Ergocun

ISTANBUL (AA) - The eurozone manufacturing sector's Purchasing Managers’ Index (PMI) dropped to its lowest level -- 50.5 -- in January since November 2014, a London-based global data company said on Monday.

"Manufacturing operating conditions in the eurozone improved only marginally and at the slowest rate for over four years at the start of 2019," IHS Markit said in its report.

The index was 51.4 in December 2018, the report showed and said that the eurozone manufacturing sector is moving closer to stagnation.

"Ongoing weakness was apparent in the intermediate goods sector at the start of 2019, whilst producers of investment goods recorded a deterioration in operating conditions for the first time since July 2013," the report read.

It added that the sector of consumer goods continued to grow.

The report said the eurozone's so-called “big-four” economies registered the lowest manufacturing PMI readings of all countries during November.

"Most notably, Germany entered contraction territory for the first time in over four years whilst the downturn in Italy gathered pace," it noted.

Rest of countries saw slower growths while the Netherlands, Greece, and Austria recorded the highest manufacturing PMI readings, with 55.1, 53.7 and 52.7, respectively.

Chris Williamson, chief business economist at IHS, said the manufacturing sector is in the recession period.

Williamson said: "Some temporary factors remain evident, including an auto sector that is struggling to regain momentum after new emissions regulation and some signs of ‘yellow vest’ disturbances dampening demand in France.

"However, there appears to be a more deep-rooted malaise setting in, which reflects widespread concerns about the destabilising effect of political uncertainty and the damage to exports from rising trade protectionism."

As a critical measurement to indicate the health of the manufacturing sector, the monthly PMI indices -- based on surveys and national data -- show growth with a value above 50 points, or contraction with a level below 50 points, compared to the previous month.