The S&P Global Eurozone Manufacturing PMI rose to 47.8 in December 2022 from the previous month's level of 47.1, its highest reading for three months, thereby signaling a softer downturn.
The index, however, continues to remain below the 50.0 mark, indicating deterioration in business conditions facing goods producers across the euro area.
Eurozone manufacturing output fell in December, marking a seventh successive month of contraction. That said, the decrease was only moderate and the weakest since June. The drop in production coincided with a further slump in new order inflows as demand for eurozone goods remained generally subdued.
In line with the trend in output, the decline in factory sales weakened since November and was the softest in four months. A slower fall in new export business also helped to alleviate the downturn in overall order books. In the absence of new business growth, eurozone manufacturers turned attention to their incomplete workloads.
Eurozone goods producers subsequently tapered their hiring activity, with the rate of job creation slowing to a 22-month low.
Inflationary pressures eased across the euro area manufacturing sector in December. The rate of input cost inflation was still sharp, but the weakest since November 2020. Output charges were subsequently raised to a weaker extent as some companies chose to pass through lower expenses to their clients. Overall, the increase in selling charges was the slowest since March 2021.
Finally, business confidence improved for a second month in a row, rising further from October's two-and-a-half-year low. In fact, future output expectations moved back into optimistic territory for the first time since August.
Nevertheless, business sentiment remained historically subdued as inflation, high energy bills and recession risks clouded the outlook.
Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: 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.
The Eurozone Manufacturing PMI (Purchasing Managers' Index) is produced by S&P Global and is based on original survey data collected from a representative panel of around 3,000 manufacturing firms. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These countries together account for an estimated 89% of eurozone manufacturing activity.
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