'No sign of recovery' from slump in manufacturing demand
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Europe’s manufacturers suffered a slump in demand last month with “no sign of a recovery”, as British factory owners also reported a slowdown in orders.
Manufacturers across the eurozone reported a decline in demand for their goods in November, with France, Germany, and Austria especially hard hit, according to the S&P Global purchasing managers’ index (PMI).
The eurozone index fell to 45.2 last month, down from 46 in October. In France, the index slumped to 43.1, falling from 44.5 in October. A figure below 50 marks a period of contraction.
In Britain, factory owners cut jobs and investment in November as output fell for the first time in seven months. The British index dropped to a nine-month low of 48, from 49.9 in October and below a flash estimate of 48.6 posted last month.
The index suggested that Brexit border checks continue to hit exports, while Rachel Reeves’s first budget as British chancellor may have undermined investment intentions. New orders fell at the fastest pace since February, S&P Global added.
In the eurozone, Germany recorded the fastest drop in output, Italy’s factory sector shrank at the fastest rate in a year, while France recorded the steepest contraction in 10 months.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “These numbers look terrible. It’s like the eurozone’s manufacturing recession is never going to end. As new orders fell fast and at an accelerated pace, there’s no sign of a recovery any time soon.”
Analysts said the situation in Britain was proving challenging for factories as difficulties abroad were made worse by the prospect of increased staffing costs in the Labour Party’s first budget.
Ms Reeves, who has put a rejuvenation of economic growth at the top of her agenda, raised employer national insurance and increased the national minimum wage above the rate of inflation from next April, heaping further costs on manufacturers at a challenging time, analysts said.
Rob Dobson, a director at S&P Global Market Intelligence, said a combination of the conflict in the Middle East, port disruptions, and extra border regulation had forced up the cost of components and raw materials.
“With recent budget announcements on labour costs and employer national insurance likely to raise costs further in 2025, and geopolitical tensions heating up notably around the threat of increased global protectionism, manufacturers are left facing an environment of high costs, low demand, and raised uncertainty for the foreseeable future,” he said.
- Guardian