Weak Demand Drives PMIs Down, Initial Signs of Job Severances Evident

EUROZONE OCT FLASH SERVICES PMI 48.2 (= FCST); SEP 48.8

EUROZONE OCT FLASH MANUFACTURING PMI 46.6 (FCST 47.9); SEP 48.4

EUROZONE OCT FLASH COMPOSITE PMI 47.1 (FCST 47.6); SEP 48.1

• Following the German manufacturing miss, the eurozone October PMI was also dragged lower by slumping factory output. Energy-intensive branches saw a steep decline in output as energy price inflation hampered production.
• High inflation and continued economic uncertainty continue to see demand conditions weaken. The composite PMI contracted for the fourth consecutive month. Excluding initial pandemic lockdowns, this is the weakest since the eurozone debt crisis in 2013.
• Highlights from the press release:
  • "Higher costs fed through to a stubbornly high rate of increase of prices charged for goods and services, which dipped only marginally compared to September."
  • "Business confidence ... at one of the lowest levels seen over the past two years, though steadied compared to September."
  • "New orders placed for goods and services meanwhile fell for a fourth straight month, the rate of loss accelerating to a pace not seen since December 2012 barring pandemic lockdown months."
  • "While employment growth ticked up slightly in October, the latest gain was the third-lowest seen over the past year and-a-half, reflecting job cutting at some firms."
  • "Business expectations for the year ahead remained subdued, running at the second-lowest since the early pandemic lockdowns."
  • "October saw the overall incidence of supply chain delays ease to the lowest for just over two years."