April 20, 2018

Slowdown in Eurozone manufacturing growth continues in March

04 April 2018, 01:12 | Marta Robbins

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However, the average reading for the first quarter of 2018 was the lowest in a year.

Weaker conditions remain evident in the small but diverse textile, clothing & other manufacturing sub-sector. Adjusted for seasonal factors, the headline Purchasing Managers Index, a composite indicator created to provide a single- figure snapshot of operating conditions in the manufacturing economy, posted 51.0 in March, down from 51.6 in February. "The backlog of orders index continued a 14-month expansion with its highest reading since May 2004, when it registered 63%".

Growth in new export business, meanwhile, slipped to a 15-month low.

The Caixin China General Manufacturing Purchasing Managers' Index (PMI) fell to 51 in March from 51.6 the previous month, the worst reading since November.

There are already some positive signs, with the survey of manufacturers used for compiling the PMI figures showing nearly 55% of companies forecast that output will be higher in 12 months' time.

Improvement to UK Manufacturing PMI Triggers GBP/EUR Exchange Rate RiseThe Pound to Euro exchange rate has risen slightly on 3rd April, following the news that the UK manufacturing PMI for March has risen.

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Backlogs of work at euro area manufacturers also increased during March, taking the current sequence of expansion to nearly three years.

Earlier sister surveys showed although growth slowed in the currency union's four biggest economies it still stayed strong.

The pound has gained more than 4 percent against the USA dollar since the end of 2017.

Tuesday's PMI showed growth in cost pressures for factories and their selling prices cooled in March, something that may reassure Bank of England officials who are keeping an eye on inflation pressures. While output and new orders continue to rise in March, though at a slower pace, job creation fell for the first time in eight months.

The slowdown was mainly driven by a weaker expansion in output and a quicker decline in head counts at manufacturing companies, as demand - particularly from overseas - lost steam, said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group. It marginally downgraded its GDP forecast to 7.3% for fiscal 2018 year.

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