Eurozone Edges from Contraction to Expansion: Reuters

02 October 2003

Output rises as growth of new orders accelerates.

Key indicators from September's Reuters Eurozone Manufacturing Purchasing Managers Index

The PMI rose for the third month running in September, up from a recent low of 46.7 in June and 49.1 in August to 50.1. In rising above the 50.0 no-change level, the PMI signalled a marginal improvement in business conditions, tilting the economic fulcrum into growth mode for the first time in seven months.

New Orders / Output
The rise of the PMI reflected faster growth of new orders and a return to growth of output in September. However, the PMI was subdued by a further fall in employment

Manufacturing employment in the euro area fell for the twenty-eighth month in a row in September. The decline was also marginally steeper than in August. A net fall in staff levels was reported in all countries except Austria.

Input Prices
Average input prices fell for the fifth successive month in September, linked partly to the lower cost of imported inputs arising from the euro’s recent strength. However, an overall easing in the rate of deflation was recorded due to marked variations in input price trends by country.

Raw Materials
The amount of raw materials purchased by manufacturers fell at the slowest rate for seven months, reflecting the upturn in production requirements. But the need to keep costs down meant overall stocks of purchases continued to fall.

Delivery Times
The Suppliers’ Delivery Times Index remained just below the 50.0 level to signal a very marginal lengthening of lead-times as suppliers grew busier. However, capacity constraints and supply-chain bottlenecks remained scarce.

The PMI is based on information provided by around 3,000 manufacturers across the Eurozone - the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, The Netherlands and Spain) within the twelve-nation euro currency zone. It reflects hard data on recent changes in activity levels rather than business sentiment or expectations. As such, the index provides the earliest indication of actual business conditions.

Data sourced from: NTC Research; additional content by WARC staff