Europe PMIs a Contraction Story

EUROZONE PMIs
The eurozone composite PMI decreased from 47.2 to 46.5 in October, which was slightly lower than the consensus forecast of 47.4. This decline in the PMI brought it to a level not seen since the pandemic-affected November 2020. Both the manufacturing and services sectors experienced drops in their respective indices. In the services sector, the activity index fell from 48.7 to 47.8, with declines in new business and employment, although the business expectations index showed a slight increase. The manufacturing PMI also saw a decrease, dropping from 43.4 to 43.0, with slight declines in output and new orders and a more significant decrease in the employment index, which continued to fall below the 50 mark. 

PMIs

Across most of the eurozone, pricing indices continued to soften. While there was an increase in the manufacturing input price index, possibly due to higher oil prices, the composite input and output price indices decreased, with the output price index reaching its lowest level since May 2001.

In Germany, the composite PMI fell from 46.4 to 45.8. The services index showed a substantial decline, dropping from 50.3 to 48.0, largely offsetting the gains seen in the previous month. Service details varied, with a sharp decrease in new orders and a drop in the employment index for the fourth consecutive month, reaching its lowest level since September 2020. However, future services activity reached a four-month high. In contrast, the German manufacturing PMI increased by 1.1 points to 40.7, aided by an improvement in orders and a less contractionary output index. Nevertheless, the manufacturing employment index decreased by over 3 points to its lowest level since October 2020.

On the other hand, in France, the composite PMI increased from 44.1 to 45.3. Unlike the eurozone, this followed a sharp decline in September, with the headline index remaining below August's reading of 46.0. There were differing trends in the services and manufacturing sectors. The services index rose from 44.4 to 46.1, with gains in activity, new business, and expectations, but a decrease in the employment index (although it remained above 50). Meanwhile, the manufacturing PMI dropped from 44.2 to 42.6, the lowest level since May 2020, reflecting broad-based declines in output, orders, and employment.

When excluding Germany and France, the composite PMI for the rest of the eurozone fell from 49.4 to 47.6 in October. The services index decreased from 49.8 to 48.6, and the manufacturing PMI dropped from 45.7 to 44.8.

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