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Germany and France drag down industrial activity in the EU in March, despite Spain’s progress | Economy

Byeditor

Apr 2, 2024

According to a report issued by S&P Global and Hamburg Commercial Bank (HCOB) on Tuesday, the European industry is facing challenges. The industrial production index (PMI) in the euro zone dropped in March, reaching its lowest figure in three months with a decrease from 46.5 points to 46.1. This decline is primarily due to contractions in the manufacturing sectors of Germany and France, the two largest economies in Europe. However, there are signs of improvement in countries like Greece, Spain, and Italy.

Despite the overall decrease in industrial production, the Eurozone manufacturing production PMI showed its best reading in the last 11 months in March, indicating that a recession is not imminent. The slowdown in new orders also decreased at a slower pace in March, marking the fifth consecutive month of improvement. Additionally, the decline in export sales helped stabilize manufacturing demand in the euro zone.

Furthermore, input costs for euro zone manufacturers continued to decline in March, while sales prices fell at the fastest rate in the last five months. HCOB chief economist Cyrus de la Rubia highlighted that the manufacturing sector is currently being impacted by the underperformance of key countries like Germany and France, which typically drive the sector’s growth.

In Spain, the manufacturing sector is struggling to recover, with a 1.6% decrease in turnover recorded in 2023. The effects of rising raw material costs, coupled with economic slowdowns and geopolitical uncertainty, are affecting the industry. However, there is optimism for recovery through increased investment in digitalization and green initiatives.

The industry challenges in Europe are reflective of a broader trend, with the German manufacturing sector also experiencing a decline. Despite this, Germany’s production drop was less severe compared to the overall decline in the euro zone. Overall, the manufacturing sector in Europe faces headwinds, but efforts towards innovation and sustainability could drive recovery and growth in the future.

By editor

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