<ul><li>Prior 47.1</li></ul><p style=““ class=“text-align-justify“>The downturn in the euro area manufacturing sector eases towards the end of last year, as supply conditions stabilise and inflation pressures cool off. That at least points to some hope that any recession will be less pronounced than feared but it is still too early to call this any sort of turning point for Europe’s economic prospects. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“A second successive monthly cooling in the rate of loss of factory output brings some cheer for the beleaguered manufacturing sector as we start the new year. The number of optimists regarding the year ahead has also now exceeded pessimists for the first time since August, hinting at a steady improvement in business confidence. </p><p style=““ class=“text-align-justify“>“Prospects have brightened amid signs of healing supply chains and a marked softening of inflationary pressures, as well as a calming of concerns over the region’s energy crisis, thanks in part to government assistance. Hence the supply chain and <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_2″ class=“terms__main-term“>inflation</a> headwinds facing businesses have moderated from the heightened state of alarm seen in the autumn. </p><p style=““ class=“text-align-justify“>“The brighter news is tempered, however, by the ongoing weakness of demand, with inflows of new orders continuing to fall at a far faster rate than companies are reducing output, suggesting that manufacturers will have to cut production sharply further in coming months unless demand revives soon. With the global economic backdrop darkening and eurozone interest rates rising again in December, risks to the demand outlook remain skewed to the downside. </p><p style=““ class=“text-align-justify“>“As for the year ahead, in addition to watching for potential fiscal and monetary policy changes, high on the list of issues for manufacturers to watch as we head into 2023 will be the impact on supply chains and commodity prices from the changing response to COVID-19 in China, as well as the possibility of sharply changing energy prices amid the changing geopolitical situation, with the Ukraine-Russia war remaining the key threat to stability in the region.”</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior 46.2</li></ul><p style=““ class=“text-align-justify“>The downturn in Germany’s important manufacturing sector eases in December, with an improvement in supply conditions helping to alleviate some of the pain from price pressures. That said, new orders were down for a ninth consecutive month as the outlook remains dim despite manufacturers being less pessimistic towards the end of the year. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“Some of the gloom surrounding the German manufacturing sector has been lifted, with December’s PMI survey showing the downturn in factory output levels easing, and less concern towards the year-ahead outlook. </p><p style=““ class=“text-align-justify“>“The survey signalled better availability of materials and with it an easing of the decline in production. Still, rapidly falling new orders remains an issue for many manufacturers, particularly intermediate goods producers (i.e. makers of components for other businesses), with high stocks being just one of the factors weighing on demand. </p><p style=““ class=“text-align-justify“>“With expectations remaining pessimistic, it suggests that in companies‘ minds the downside risks to future production continue to outweigh any growth opportunities. The outlook has, however, improved compared to the situation a few months ago, with concerns towards gas prices and supplies having subsided somewhat. </p><p style=““ class=“text-align-justify“>“On the price front, we’re seeing further evidence of disinflationary forces in the manufacturing PMI survey. Although still historically elevated, the rate of factory gate price inflation has more than halved from its peak in the spring of last year, as supply chain bottlenecks ease and firms face greater difficulty passing on cost increases to customers.“</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior 48.3</li></ul><p style=““ class=“text-align-justify“>This just reaffirms another contraction in France’s manufacturing sector, though the drop in output is the slowest in the past seven months. However, employment conditions declined for the first time since January 2021 and there was a slight acceleration in output charge inflation. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“France’s manufacturing downturn continued into December as the effects of inflation, slowing economic activity and high energy costs weighed on the performance of the sector. </p><p style=““ class=“text-align-justify“>“However, the strength of the downturn continued to ease, with output and new orders falling at their slowest rates since May and June respectively. An improvement in business confidence also provides tentative signs that the industrial sector recession may not be as severe as first feared. </p><p style=““ class=“text-align-justify“>“Inflation remains a key risk to the performance of the manufacturing sector, with high prices deterring clients from making new orders. The fact that energy costs thus far haven’t surged to the levels some were initially expecting has been a boost to the sector, although whether things take a turn for the worst this remains to be seen.“</p>

This article was written by Justin Low at www.forexlive.com.