Survey: Manufacturing activity slowdown in Euro area likely ‎exceeded its lows

A survey showed on Monday that the slowdown in manufacturing activity in the euro area has likely exceeded its lowest levels as supply chains begin to recover and inflationary pressures ease, which led to an increase in optimism among factory managers.

According to “Reuters”, the Standard & Poor’s Global Purchasing Managers’ Index for the manufacturing sector increased in its final reading to 47.8 in December from 47.1 in November, which matches the initial reading but is still below the 50 barrier separating growth from contraction.

An index measuring output, which feeds into a composite purchasing managers’ index due on Wednesday and is seen as a good measure of economic health, also came in at 47.8, up from 46.0 in November, the seventh consecutive month below 50. But it represents its highest level since June

The final data came earlier than usual last month due to the holiday season

“The decline in the rate of factory production losses for the second month in a row brings some cheer to the problematic manufacturing sector at the start of the new year,” said Chris Williamson, chief business economist at Standard & Poor’s Global Market Intelligence.

He added, “Prospects have improved amid indications of recovery in supply chains and a significant decline in inflationary pressures, as well as easing concerns about the energy crisis in the region, thanks in part to government aid.”

While the sub-indices of input and output prices remained high, both fell significantly, and this news is likely to be welcome news for policy makers at the European Central Bank who are trying to quell runaway inflation by tightening monetary policy.

The decline in inflationary pressures, the recovery of supply chains, and the possibility of avoiding an energy crisis prompted purchasing managers to be optimistic, so that the future production index jumped to 53.8 from 48.8.