Eurozone manufacturing weakens in November as demand softens

Eurozone manufacturing activity slipped back into contraction in November as renewed demand-side weakness weighed on factory performance. The index fell to 49.6 from October’s neutral 50, according to the HCOB Eurozone Manufacturing purchasing managers’ index (PMI).

The data, compiled by S&P Global, signalled a fresh, though marginal, deterioration in operating conditions across the single-currency bloc. The decline was the sharpest since June but remained modest.

Demand faltered again, with new orders, the PMI’s heaviest-weighted component, declining after stabilising in October. New export orders contracted for a fifth consecutive month, underscoring persistent challenges in overseas markets. Although the fall in total new work was marginal, factories increasingly relied on completing backlogs to support production.

Output rose for the ninth month running but at its slowest pace in the current growth sequence and only marginally overall. Weaker demand prompted firms to intensify retrenchment measures: employment fell at the fastest rate since April, purchasing activity dropped, and inventory depletion accelerated. Stocks of finished goods were reduced at the steepest pace in almost four-and-a-half years.

The survey highlighted growing supply-chain frictions despite softer demand pressures. Suppliers’ delivery times lengthened to the greatest degree since October 2022, with manufacturers citing material shortages and difficulties sourcing items from international vendors, S&P Global said in a release.

Cost pressures also re-emerged. Input prices saw their strongest monthly rise since March following an extended period of near-stability through 2025. Even so, the rate of increase was well below the long-term survey trend dating back to 1997. Output charges fell fractionally, marking the sixth decline in seven months and signalling limited pricing power among eurozone producers.

Performance diverged sharply by country. Ireland led growth with its fastest expansion in four months, and Austria and Italy returned to improvement. Spain, Greece and the Netherlands maintained growth, though at slower or steady rates. In contrast, Germany and France saw conditions worsen further, with both PMIs falling to nine-month lows and deeper into contraction.

Despite the setbacks, business confidence improved. Sentiment for the year ahead rose above its long-run average and hit its strongest level since June.

 “The current picture of the eurozone is sobering, as the manufacturing sector is unable to break out of stagnation and is even tending towards contraction. In search of rays of hope, there are some notable developments. Spain’s industry is escaping the downward pull of the major eurozone economies and has remained in growth territory for the seventh month in a row. Although Italian factories are not showing any particular momentum, they are at least growing after a contraction in September and a stagnation in October,” Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said commenting on the PMI data.

“Most companies in the eurozone are confident that they will be able to expand their production in the next twelve months. In this regard, the mood in Germany has improved somewhat, and in France there has even been a shift from pessimism to optimism. If one believes the saying that ‘half of economics is psychology,’ then this increased confidence is an indication that things will improve in the coming year,” Rubia concluded.

Eurozone manufacturing weakened in November as the PMI slipped to 49.6, signalling a renewed but modest contraction driven by softer demand and falling new orders.
Output growth slowed, employment and inventories fell sharply, and supply-chain delays intensified.
Input costs rose at their fastest pace since March, while output prices edged lower.

Fibre2Fashion News Desk (HU)