New orders and output continued to contract, delivery times were sharply shortened, and the eurozone manufacturing PMI hit a three-month low.

On April 1, the final eurozone manufacturing PMI released by S&P Global and Hamburg Commercial Bank (HCOB) 46.1, higher than the market expectation of 45.7, but less than the previous value of 46.5, a three-month low, the 21st consecutive month in the contraction range.

Data continue to point to a contraction in the eurozone manufacturing sector, and while indicators of output and new orders have picked up and business confidence has risen to its highest level in almost a year, growth expectations remain relatively weak, further weighing on factory employment.

First, new orders may record the longest decline in history

3500/33 149992-01 Eurozone manufacturing output shrank in March, but the pace of contraction was the weakest since April 2023 and the cooling of new orders also slowed, slowing for a fifth straight month.

Cyrus de la Rubia, chief economist at Commerzbank Hamburg, commented:

The pace of decline in new orders slowed significantly in the first quarter, however orders were still significantly lower compared to the previous month and are expected to record the longest contraction in new orders in history, the 25 months during the eurozone crisis between 2011 and 2013, which is not conducive to a rapid rebound in activity.

At the same time, the data showed that warehouse inputs fell for the 14th consecutive month, and suppliers reduced delivery times by the most since September last year, despite continuing problems with ships in the Red Sea.

At the same time, unfilled orders fell at the slowest pace since February 2023, and factories continued to lay off workers steadfastly, in line with the trend since last June.

Second, Germany and France continued to shrink, while Italy and Spain resumed growth

3500/33 149992-01 By country, manufacturing performance diverged further across regions, with Greece continuing along its resilient growth path and improving to its most significant level in more than two years. Spain expanded modestly again, only slightly weaker than in February. Italy rebounded for the first time in a year.

While other countries remained in contraction, the German manufacturing PMI fell further to 41.9 from 42.5 the previous month, a five-month low; The French manufacturing PMI fell sharply to 46.2 from 47.1 last month, but edged ahead of expectations.

Cyrus de la Rubia, chief economist at Commerzbank Hamburg, commented:

The manufacturing PMI remained in contraction territory, mainly due to the poor performance of the German and French manufacturing sectors. The GDP forecast model combined with the PMI data predicts that the eurozone manufacturing sector will continue to decline.

Manufacturing activity in the euro area depends mainly on the four largest countries in the euro area – Germany, France, Italy and Spain, which together account for three-quarters of the euro area’s manufacturing.

Among them, the German and French manufacturing is more or less idle, while Italy and Spain began to pick up in March and February, respectively. So far, this has not been enough to bring the whole eurozone back into growth mode, and a sustainable upturn can only be expected if the PMI returns to expansion in four countries.