Eurozone Manufacturing Activity Shrinks In January

(RTTNews) - The euro area manufacturing activity shrank at a slower pace in January as production returned to growth, final survey results from S&P Global showed on Monday.

The final HCOB manufacturing Purchasing Managers' Index rose to 49.5 in January from a nine-month low of 48.8 in December. The flash reading was 49.4.

The score has remained below 50.0 for the third successive month in January indicating contraction in the sector.

"Some progress can be seen in the manufacturing sector, but it's happening at a snail's pace," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"After dropping in December, production ticked up slightly at the start of the year, essentially continuing the growth path we saw between spring and fall last year," de la Rubia added.

Manufacturing output grew for the tenth time over the past eleven months in January. New orders received by manufacturers declined for a third straight month. Likewise, new export orders decreased again.

Meanwhile, job losses were extended and firms reduced their buying quantities. Nevertheless, business confidence improved to its highest level since February 2022.

Elsewhere, pricing power appeared to be limited amongst manufacturers, with charges broadly unchanged from the prior month despite input cost inflation accelerating to a three-year high.

Country level data showed that expansion in France was more-than-counteracted by deterioration in Germany, Italy and Spain.

France's manufacturing sector reported its fastest growth in output in close to four years in January. The factory PMI rose to a 43-month high of 51.2 from 50.7 in December. The reading was slightly above the flash estimate of 51.0.

Germany's manufacturing activity continued to contract for 43 straight months in January. However, the final factory PMI rose to a three-month high of 49.1 in January from 47.0 in December as output returned to growth after a brief contraction in December. The initial PMI score for January was 48.7.

Italian manufacturers reported another contraction in January but there were signs of the downturn softening. The HCOB factory PMI climbed to 48.1 from 47.9 in December.

Spain's manufacturing PMI registered 49.2 in January, down from 49.6 in December. The score registered below the critical 50.0 mark for the second straight month.