Eurozone manufacturing grows for second month running
The Eurozone manufacturing sector saw “modest growth” for the second month running in August, according to a new survey, as the bloc’s economic recovery continued.
However, the factory sectors in Spain and France stagnated while Greek manufacturing declined for the sixth month in a row.
The IHS Markit Eurozone manufacturing purchasing managers’ index – a gauge of the sector’s health – came in at 51.7 in August, virtually unchanged from 51.8 in July.
It was “further encouraging evidence that production will rebound sharply in the third quarter after the collapse seen at the height of the Covid-19 pandemic in the second quarter,” said Chris Williamson, chief business economist at data firm IHS Markit.
All three areas – consumer, intermediate and investment goods – grew in August. Output climbed for the second month in a row and hit its highest level in over two years, survey respondents said.
New orders also grew for the second consecutive month. IHS Markit said domestic orders rose quickest, with export orders climbing at a relatively modest pace.
Eurozone manufacturing firms lay off workers
However, the sector was far from its pre-coronavirus health and there were pockets of weakness in August.
Manufacturing firms continued to slash jobs, laying off workers for the 16th month in a row. German factories cut jobs at the quickest rate.
Meanwhile, Spain and France’s factory sectors flatlined as coronavirus cases rose. In Greece, which has been hit hard by the pandemic economically despite having few cases, the sector contracted.
IHS Markit said Italian manufacturers were the most optimistic about their future, while French firms were the least confident.
“Manufacturing is currently being buoyed by a wave of pent up demand, but capacity is being scaled back,” said Williamson. “Job losses remained amongst the most prevalent since the global financial crisis.”
“The next few months’ data will be all-important in assessing the sustainability of the upturn.”