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European factory gloom deepens

By Philip Smith

Output sees 11th consecutive fall, with Germany and UK the hardest hit

Factory output across Europe is showing a continued downturn, completing a poor year for the manufacturing sector.

The Eurozone had its 11th consecutive drop in monthly output. British factory output fell in December at the fastest rate since 2012.

The Purchasing Managers’ Index (PMI) shows a fall in Eurozone output to 46.3 in December, from 46.9 in the previous month. A reading of below 50 indicates that the majority of companies surveyed reported a shrinking of activity.

The only positive is that the output was higher than a preliminary estimate of 45.9. In the UK, output fell to 45.6 from 49.1 in November.

“Eurozone manufacturers reported a dire end to 2019, with output falling at a rate not exceeded since 2012,” said Chris Williamson, chief business economist at IHS Markit, which runs the PMI.r

“Although firms grew somewhat more optimistic about the year ahead, a return to growth remains a long way off given that new order inflows continued to fall at one of the fastest rates seen over the past seven years,” he added.

With new orders dipping to 46.6 from 46.7, manufacturers turned to completing backlogs of work to stay active.

The Netherlands and Italy experienced their largest monthly declines in six and a half years, while France saw a small gain.

The figures were particularly poor for Germany. The main driver behind the euro economy fell to 43.4 in December from 44.1 in the previous month.

FURTHER READING: Eurozone industrial production shrank in October

FURTHER READING: German manufacturing falls for fourth consecutive month

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