<p style=““ class=“text-align-justify“>Eurozone manufacturing activity continues to contract further in November, albeit at a slower pace than in October at least. Output and new orders were both seen declining again, while <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_1″ class=“terms__main-term“>inflation</a> pressures eased in part due to weaker demand and also reduced strain on suppliers. This is a theme that is seen across all the individual country reports today. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“The PMI signals some welcome moderation in the intensity of the eurozone manufacturing downturn in November, which will support hopes that the region many not be facing a winter downturn as severe as previously anticipated by many. However, the survey’s production index continuing to run at one of the lowest levels recorded over the past decade. At these levels the survey is indicative of a marked annualised rate of contraction of approximately 4%. While official manufacturing data have been more buoyant – and more volatile – in recent months, such weak PMI readings have always been followed by commensurate steep declines in the official statistics. </p><p style=““ class=“text-align-justify“>“There also seems to be no immediate respite in sight for the plight of manufacturers, given that order books continue to deteriorate at a worryingly steep pace, contracting at a far faster rate than firms are cutting production. Inventories of unsold stock are therefore rising further and follow on from the largest build-up of finished goods inventories in the quarter century history of the survey in recent months. Such a stock build-up will inevitably be followed by further production capacity cuts, absent a revival in demand. </p><p style=““ class=“text-align-justify“>“A consequence of the recent inventory build-up and softening of demand has been a major pull-back in purchases of inputs by manufacturers, which has in turn taken pressure off supply chains. Supplier delivery times lengthened in November to the smallest extent since August 2020, and are now even improving in Germany. This improvement in supply is an important signal of a shift from a sellers’ to a buyers’ market, and is hence being accompanied by a significant cooling of industrial price pressures. </p><p style=““ class=“text-align-justify“>“Looking ahead, future output expectations have picked up slightly on improved supply chain and energy market signals, the latter buoyed by warmer than usual autumn weather, but confidence remains amongst the lowest seen over the past decade. How manufacturers fare over the winter months will of course be conditional to a large extent on the weather, with any cold snaps likely to fuel concerns over energy resources and potentially hitting production and supply chains further.”</p>

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