Eurozone manufacturing sector contracts, but at slowest rate since April 2019 - IHS Markit

According to the report from IHS Markit, operating conditions in the euro area manufacturing economy continued to weaken at the start of the year, but at a noticeably slower rate.

After accounting for seasonal factors, the Eurozone Manufacturing PMI registered 47.9, slightly better than the earlier flash reading and above December's 46.3. Economists had expected an increase to 47.8. Although the index has now recorded below the crucial 50.0 no change mark for 12 months in succession, the latest reading was the highest since April 2019.

Market groups data signalled that the consumer goods category remained the strongest-performing during January, registering marginal growth for a second successive month. In contrast, the intermediate and investment goods sectors both continued to contract, although rates of decline weakened in each instance.

There was a broad-based rise in national PMI figures during January, with all eight countries covered recording higher readings compared to December.

Euro area manufacturing production and new order levels both continued to decline at the start of 2020, although in each case at weaker rates than at the end of 2019. The rate of decline in new work was, however, the slowest for over a year, helped in part by only a marginal reduction in new export sales. Eurozone manufacturers also continued to make cuts to their purchasing activity, although in line with trends for output and new orders, the fall in purchasing activity was the weakest in 11 months. Latest data showed that input costs fell for an eighth month in succession and afforded manufacturers further room to cut their own charges. January's survey signalled another fall in output prices, maintaining a trend that has been evident since last July.

Looking ahead to the next 12 months, confidence about the future jumped at the start of 2020 to its highest level since August 2018.