Markit's Eurozone Manufacturing Purchasing Managers Index (PMI) posted 51.4 points in December last year, down from November’s 51.8 points and remaining unchanged compared to the earlier flash estimate. The euro zone manufacturing PMI was the lowest seen since February 2016.
The latest data showed divergent trends by market group. Whilst growth in the consumer goods sector accelerated to a solid level, there was a deterioration of operating conditions for intermediate goods producers. Marginal growth was recorded in the capital goods category. In December, business confidence slumped to the lowest level since December 2012 due to trade concerns amongst manufacturers about the development of global trade protectionism measures, tightening financial conditions and ongoing political uncertainties.
“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 in the previous year. The last three months of 2018 saw manufacturers report the worst quarterly performance in terms of production since the second quarter of 2013,” stated Chris Williamson, chief economist at Markit. “More encouragingly, some of the recent weakness could prove temporary, being the result of protests in France and the auto sector struggling to adjust to new emissions regulations. However, the undercurrent of weak demand and growing risk aversion evident across the surveys suggests that any rebound could prove modest at best, with Brexit representing a particularly worrying unknown for the outlook,” he added.