Eurozone Manufacturing December 2011: Eurozone Factory Sector Shrunk For Fifth Straight Month

Euro zone manufacturing activity declined for a fifth consecutive month in December, although at a slightly slower rate than November's 28-month record low, a survey showed on Monday, suggesting the decline would continue in the early months of 2012.

Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) rose slightly in December to 46.9 from November's 46.4, but marked its fifth month below the 50 mark that divides growth from contraction. It was unchanged from an earlier preliminary reading.

Survey compiler Markit said levels of production and new orders fell in all of the euro zone countries covered by the survey for the second month running.

"Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5 percent in the final quarter of 2011," said Chris Williamson, chief economist at Markit.

"The survey also points to a strong likelihood of further declines in the first quarter of the new year, with producers cutting back headcounts, inventories and purchasing."

The euro zone economy is already stuck in a recession that will last until the second quarter of 2012, Reuters polls of economists suggested last month. They forecast the economy will probably see no growth this year.

Business and consumer confidence in the currency bloc has been eroded by a weakening global economy and by euro zone policymakers' failure to make progress on resolving the euro zone debt crisis. Austerity measures imposed to try and cut high debt levels in the currency bloc risk further undermining euro zone economies this year, analysts say.

The new orders component of the December PMI survey also picked up slightly, to 43.5 in December from 42.4 the previous month, but it remained weak and Markit warned of a persistent and worrying divergence in order levels and output.

"Worryingly, new orders are falling at a far faster rate than manufacturers have been cutting output, meaning firms have been reliant on orders placed earlier in the year to sustain current production levels," said Williamson.

"This is particularly evident in Germany, and suggests that operating capacity will be slashed in coming months unless demand revives."

The manufacturing jobs market was virtually stagnant in December compared with November. The euro zone unemployment rate edged up to 10.3 percent in October, a figure that encompasses very high levels of joblessness in peripheral countries such as Spain and Greece with relatively firm labor markets in France and Germany. [ID:nB5E7JV00F](Editing by Susan Fenton)

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Comments

[AZreb]

08:00 AM on 01/03/2012

So the Euro zone manufacturing is going the way of our own manufacturing - last month's figures showed only 2,000 new manufacturing jobs in the US. Now China is cutting back on its manufacturing and some of its smaller companies are closing or laying off employees. What does this mean for the global economy? And what will it mean when we can no longer import items that we need for everyday life? Will we see a push toward more manufacturing in our own country? That would be wonderful - but don't hold your breath.

[becky bradshaw]

08:34 AM on 01/03/2012

Europe and the U.S. still have much in common. Over the last 10 years, the U.S. has lost 50,000 manufacturing jobs per month.

"The (sic) U.S. deficit of $273 billion in bilateral trade with Beijing reflects a persistent feature of the Sino-American relationship since China joined the World Trade Organization in 2001. Over the last ten years, China has mounted the biggest challenge to the U.S. manufacturing sector ever seen, threatening producers of steel, chemicals, glass, paper, drugs and any number of other items with prices they cannot match. Not coincidentally, the United States has lost an average of 50,000 manufacturing jobs every month during the same period." (http://www.forbes.com/sites/beltway/2011/02/14/intelligence-community-fears-u-s-manufacturing-decline/)

Forty percent of the global population lives in China and India. The average manufacturing worker in China makes about $200 per month, or less than 1/19th that of an American worker. Globalism will inevitably level the level of international wages. China and India's wages will climb (they already are a little), and our wages will decline. The process will take decades.

Reference: http://www.globalresearch.ca/PrintArticle.php?articleId=26769

[sking007]

08:19 PM on 01/02/2012

Gee, I'm envious the EU even has a manufacturing sector. I only hear stories how this sector once existed in the US from my grandfather.

[Fortheloveofhumanity]

04:19 PM on 01/02/2012

First at last!