Eurozone PMI drops at start of 2016

The final seasonally adjusted Eurozone Manufacturing PMI posted 52.3, down from 53.2 in December, the latest Markit report has revealed.

The PMI has now remained above the neutral 50.0 mark for 31 consecutive months.

“Despite the slower pace of headline growth signalled by the latest survey, the outlook for the manufacturing sector remained mildly positive overall.

“An accelerated increase in employment and higher backlogs of work both suggest that the upturn should be sustained in the coming months.

“Input cost pressures also remained heavily toward the downside, as purchase prices fell at one of the fastest rates during the past six-and-a-half years,” the report read.

National PMI indices showed that rates of expansion Markit 2016 slowed in two of the big-three euro area industrial nations (Germany and Italy) and fell back to the stagnation mark in the other (France).

All of the big-three countries reported slower increases in production and weaker trends in new business. Both total new orders and new export business grew at slower rates in Germany and Italy, and fell in France.

The upturn in the Netherlands also moderated at the start of 2016.

Chris Williamson, Chief Economist at Markit said: “The eurozone’s manufacturing economy missed a beat at the start of the year.

“Having accelerated for three straight months, the rate of growth slipped from the 20-month high attained at the end of 2015. Growth of order books, exports and output all slowed.

“If the slowdown in business activity wasn’t enough to worry policymakers, prices charged by producers fell at the fastest rate for a year to spur further concern about deflation becoming ingrained.

“Growth slowed in Germany, Italy and the Netherlands and stagnated in both France and Greece, but Spain, Ireland and Austria all bucked the slowdown trend, with Spain regaining top spot for the first time since last January 2005.”

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