European manufacturing saw a slight decline at the tail end of 2018. According to IHS Markit’s Purchasing Managers’ Index (PMI), manufacturing in December fell to 51.4 from 51.8 in November – the fifth consecutive monthly fall.
Photo: Nestle / Flickr
Photo: Nestle / Flickr. Licence: CC BY-NC-ND
This is the lowest reading for Europe’s factories since February 2016, while new orders fell by the highest rate since 2014. The biggest decline was seen in Italy and France, with both countries seeing PMI readings of below 50 (readings below 50 in the PMI refer to industries actively shrinking, as opposed to the growth indicated by numbers over 50). Meanwhile, the EU’s strongest manufacturers, Germany and Spain, saw their weakest growth in production in over two years.
A poll carried out in December by Reuters suggested the potential of a Europe-wide recession had risen from 15% to 20%, with firms saying they were less optimistic than at any time in the last six years. The future output index has dropped from 56.3 to 56.0.
According to Chris Williamson, chief business economist at IHS Markit: “A disappointing December rounds off a year in which a manufacturing boom faded away to near-stagnation. The weakness of the recent survey data in fact raises the possibility that the goods-producing sector could even act as a drag on the overall economy in the fourth quarter, representing a marked contrast to the growth surge seen this time last year. Continued worries over global trade, ongoing political uncertainties and tightening financial conditions all served to undermine confidence during December.”
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