Eurozone Returns to Growth After September Dip

06 November 2002

Output in the Eurozone – the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, The Netherlands and Spain) within the twelve-nation euro currency zone – returned to growth in October, according to the Reuters Eurozone Purchasing Managers Index – a monthly indicator designed to provide an overall view of manufacturing conditions within the Eurozone.

Main points from October’s PMI are …

The Composite Output Index, an indicator of overall private sector economic growth within the manufacturing and service industries, rose from an index level of 49.1 in September to 50.7 in October [50.0 = no change].

The Manufacturing Output Index registered 51.6 in October, a strong gain on September’s local low of 49.1, but nevertheless only modestly above 50.0. The recovery in the output index series for the Euro area was driven principally by a sharp rebound in the German production index (from an eleven-month low of 44.3 in September, to a nineteen-month high of 52.3 in October) as output returned to more normal levels following the disruption caused by the flooding in September.

New Orders
The Manufacturing New Orders Index for October was up on September’s eight-month low of 49.6 but, at exactly 50.0, signalled no overall change in total order books from one month earlier. Order levels were reported to have fallen in five out of the eight national manufacturing economies covered although, of those, only the Netherlands saw a significant drop in demand.

The Manufacturing Employment Index recorded 46.0, to signal a contraction of employment in the sector for the seventeenth consecutive month and the sharpest rate of decline since January. All eight countries reported a contraction of manufacturing employment.

Input Prices
Weaker demand for inputs in October helped ease upwards price pressures. The Eurozone Manufacturing Input Prices Index recorded 52.1, down for the third month running from July’s recent high, and the lowest reading seen for seven months. Along with falling demand for raw materials and semi-manufactured goods, a fall in the price of crude oil was also reported to have eased inflationary input pressures.

The Report on Eurozone is a monthly publication, researched and published by NTC Research featuring original data from surveys of Eurozone purchasing executives across 2,500 companies in the manufacturing and service sectors.

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