Eurozone suffers new PMI lows, UK sees slight improvement

02 April 2013 17:07  [Source: ICIS news]

LONDON (ICIS)--The Purchasing Managers' Indexes (PMIs) of the eurozone and Germany hit three-month lows in March with business conditions deteriorating in all the euro nations, financial information group Markit Economics said on Tuesday.

The eurozone Markit PMI fell to 46.8 from 47.9 in February, while in Germany volumes of work decreased for the first time so far in 2013, taking the Markit/BME PMI down to 49.0 from 50.3 in February (any figure under 50.0 signifies contraction), it added.

In France, operating conditions continued to worsen at a marked pace, Markit said. Although the Markit PMI edged up to a three-month high of 44.0 in March from 43.9 in the previous month, the figure remained indicative of a sharp downturn, it noted.

Other March figures for the eurozone nations included the Markit/ADACI PMI for Italy hitting a seven-month low of 44.5, falling from February's 45.8; the Markit PMI for Spain dropping to its lowest point since last October – to 44.2 from 46.8 in February; the NCB Republic of Ireland PMI declining to 48.6 from 51.5 in February, meaning the Irish manufacturing sector saw its first deterioration in business conditions since February 2012; and the NEVI PMI for the Netherlands sinking to its lowest level since May 2012, registering 48.0 compared to 49.0 in the previous month.

There was better news from the UK with the Markit/CIPS PMI for March coming in at 48.3, an improvement on February's four-month low of 47.9.

In the region of central & eastern Europe, there were March falls in the PMIs of both the Czech Republic and Poland.

The HSBC Czech Republic PMI was recorded at 49.1, against February's 49.9, while the HSBC Poland PMI registered 48.0 against 48.9 in the preceding month, which was the first month-on-month decline in the index since last September.

Of the eurozone countries, the Netherlands and Italy were the only ones to report increases in new export orders, while Germany reported a slight fall, Markit said.

“The eurozone manufacturing sector looks likely to have acted as a drag on the economy in the first quarter, with an acceleration in the rate of decline in March raising the risk that the downturn may also intensify in the second quarter,” said Chris Williamson, chief economist at Markit.

“The surveys paint a very disappointing picture across the region, with all countries either seeing sharper rates of decline or – in the cases of Germany and Ireland – sliding back into contraction,” he added.

Looking at the UK PMI, David Noble, CEO at the Chartered Institute of Purchasing and Supply, concluded that the “manufacturers' winter of discontent extended into March, with continued weak demand at home and abroad, increased costs, and constraints on investment all conspiring against the sector, leading to the eighth consecutive month of job losses”.

He added: “As a result, activity in manufacturing has fallen at the fastest pace since October and the absence of new orders brings little hope of an uplift in spring. UK manufacturing exports have been hit directly not only by the problems in the eurozone, but also by strong competition overseas. Despite demand in the US and South Asia, competition for contracts is tough and British manufacturers are increasingly struggling to peak in these markets.

"The engine of the manufacturing sector – intermediate goods – experienced a significant dip in performance. When this is coupled with the poor performance of investment goods production and consumer goods flatlining, there is little to suggest that we can expect anything other than more of the same in the months ahead.”

By: Will Conroy
+44 20 8652 3214

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