“Disappointingly insipid”: one economist’s view of the recovery of manufacturing in the eurozone after the latest figures.
Markit’s survey of the sector in October shows weak growth, suggesting that the European Central Bank’s huge stimulus programme that began over six months ago has had little effect.
Markit’s final manufacturing Purchasing Managers’ Index was 52.3 last month, only slightly up from the September and preliminary October reading of 52.0. It has, however, been above the 50 mark that separates growth from contraction for over two years.
An index measuring output that feeds into a composite PMI due on Wednesday and seen as a good guide to growth nudged up to 53.6 from 53.4 in September, beating the flash reading of 53.3. The index stood at 53.6 in March as well – just as the ECB began its bond buying.
Markit’s Chief Economist Chris Williamson described factory output growth of only two percent per annum as “a lacklustre performance given the amount of central bank stimulus in place”.
Factories have again been resorting to cutting prices to try to drum up trade. The survey shows that they fell at the steepest rate for eight months.
With eurozone prices flat and inflation nowhere near official target, it’s widely thought the ECB will ease monetary policy in December.
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