23 June 2011 | Adam Leach
A sharp slowdown in manufacturing in the Eurozone has led to the lowest rate of
growth since October 2009, according to purchasing managers.
The Markit Flash Eurozone Purchasing Managers’
Output Index (PMI), based on data from 13-22 June, dropped to 52.4 for June
compared with 55.2 in May.
Output growth has slowed sharply since peaking in
February. This was a result of the first drop in new orders since July 2009 and
only a modest rise in export orders.
The PMI survey also saw the ratio of new orders to
inventories in the manufacturing sector drop to its lowest since April 2009.
The German manufacturing sector grew slightly in June but slowed down sharply
from the pace seen in the first quarter, with growth slightly increasing from
May. Meanwhile France saw growth in the sector hit an eight-month low.
On a more positive note for manufacturers, the report found that input prices
had increased at the slowest rate since October 2010, down from the peak rate in
March.
Chris Williamson, chief economist at Markit said: “The euro area’s economic growth surge has
lost momentum at a worrying rate in the past two months. Manufacturing growth
has slowed especially sharply, slipping close to stagnation in June.
“Even German manufacturing, the
driving force of the region’s recovery, has seen a marked deterioration in
output and new orders growth – linked to a large extent to a severe weakening
of export order book growth. Meanwhile, the euro area excluding France and
Germany has fallen back into contraction for the first time since late 2009.
“Although prices charged for goods
and services rose at an increased rate, input cost inflation slowed sharply,
largely reflecting lower oil and other commodity prices. Lower costs should
feed through to lower selling prices, and ultimately consumer price inflation,
in the coming months.”
