The Eurozone Manufacturing PMI worsened in February 2024, S&P Global and Hamburg Commercial Bank (HCOB) shared in a report on Friday. The figure stood at 46.5, down from last month’s 46.6, reaching a 2-month low and remaining in contractionary territory. “The attacks by the Houthis on commercial vessels in the Red Sea have had a temporary impact, leading to a brief lengthening of delivery times in January, followed by a subsequent reduction in lead times in February,” HCOB Chief Economist Cyrus de la Rubia commented. The drop in the manufacturing sector was mainly driven by Germany, “which registered its sharpest deterioration in four months,” followed by Austria and France. However, Greece and Ireland witnessed their strongest expansions in 24 and 20 months, respectively. Spain, after almost a year, finally returned to growth.
UK manufacturing slump persists amidst Red Sea crisis
The UK manufacturing sector’s downturn persisted in February, with the S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) at 47.5, slightly up from the previous month’s 47.0. According to the report, the sector issues continued through February 2024, as weak demand and the ongoing crisis in the Red Sea compounded challenges, disrupting production and vendor delivery schedules. Manufacturers reported that these disruptions have increased costs as they seek alternative suppliers from more expensive, closer markets. “UK manufacturers faced challenging circumstances in February, as the ongoing impact of the Red Sea crisis delayed raw material deliveries, inflated purchase prices, and impacted production capabilities. There were also knock-on effects for demand, as new export orders were hit by both supply disruptions and higher shipping costs. Production volumes subsequently contracted for the twelfth successive month while total new orders fell at the sharpest rate since October,” Rob Dobson, Director at S&P Global Market Intelligence, said.
German manufacturing PMI suffers fresh setback in Feb
Germany Manufacturing Purchasing Managers’ Index (PMI) stood at 42.5 in February, down from an 11-month high of 45.5 in January, according to the latest report by S&P Global and Hamburg Commercial Bank published on Friday. The sector saw accelerated declines in both output and new orders, marking a concerning setback as the quarter progressed. The output index similarly fell to 42.3 from 45.7, indicating the fastest rate of contraction since October of the previous year. This downturn was primarily driven by a sharp decrease in demand, affecting both domestic and international sales. February’s data highlighted an increase in factory job losses, the most significant since August 2020, amid falling backlogs of work and dwindling expectations for future activity. “All hope has been dashed – for the moment. After a steady increase of the PMI over the last half a year, the index plunged to its lowest point since last October. The drop was the result of a broad-based deterioration of indicators like the accelerated fall in new orders, the faster downturn in output, and the more aggressive trimming of jobs.
The widespread nature of the downturn offers little hope for a turnaround in the near future.” Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank said. NN:: falling economies means falling demand for oil