Euro area factory activity downturn eases in January

By Tuba Ongun

The downturn in the euro area manufacturing sector softened in January for the third consecutive month, with factory output and new orders falling at the weakest for nine months.

The Hamburg Commercial Bank (HCOB) eurozone manufacturing purchasing managers' index (PMI) rose to a 10-month high of 46.6 in January, from 44.4 in December.

The PMI has stayed below the threshold level since July 2022, according to data released on Thursday.

New orders and output indices, accounting for 55% of the PMI, both hiked by over two points at the start of the year, marking further contractions but at the slowest rates since last April.

There was substantial spare capacity at eurozone factories, as shown by a sharp drop in backlogs of work.

Employment reductions continued in January, at the softest rate in four months.

Both input costs and output prices decreased at a faster rate in January, despite suppliers’ delivery times lengthening for the first time in a year following the Red Sea attacks.