Key Takeaways
- Italy's manufacturing sector returned to growth in November, with the HCOB Manufacturing PMI rising to 50.6, surpassing expectations and marking the strongest improvement in over two-and-a-half years.
- Conversely, France's manufacturing downturn deepened, as its HCOB Manufacturing PMI held steady at a final 47.8, a nine-month low, indicating a continued contraction in factory conditions.
- While Italian manufacturers saw a significant uplift in new orders, particularly exports, French factories experienced faster declines in production and new orders, despite a rare rebound in export volumes.
- The divergent performances contribute to a weakening overall Eurozone manufacturing picture, with the HCOB Flash Eurozone Manufacturing PMI slipping to a five-month low of 49.7 in November.
Manufacturing activity across the Eurozone presented a mixed picture in November, with Italy's sector showing a notable return to growth, while France's continued its contraction. The latest HCOB Purchasing Managers' Index (PMI) data, compiled by S&P Global, highlights a growing divergence within the bloc's major economies.
Italy's manufacturing sector demonstrated a robust recovery, with the HCOB Italy Manufacturing PMI rising to 50.6 in November, up from 49.9 in October and exceeding the estimated 50.2. This figure, moving above the critical 50.0 threshold, signals the first sectoral expansion in three months and the strongest improvement in the health of the sector in over two-and-a-half years. The positive momentum was largely driven by a renewed increase in total new orders, bolstered by improved export sales, which saw their strongest increase in over three-and-a-half years. Production volumes also saw a slight increase, though employment and purchasing levels decreased, and cost inflation rose at its strongest rate in three years.
In stark contrast, France's manufacturing sector continued its downward trend. The HCOB France Manufacturing PMI registered a final 47.8 in November, matching preliminary estimates and remaining unchanged from the flash reading, but down from 48.8 in October. This marks a nine-month low, indicating a sustained and slightly stronger deterioration in factory health across the Eurozone's second-largest economy. Production levels were cut at a faster rate, the quickest since February, and new orders continued to fall, extending a three-and-a-half-year sequence of decline. Despite the overall weakness, new export orders increased for the first time in almost four years, offering a glimmer of hope amidst reports of increased client interest from Europe, Africa, and the APAC region. Employment declined for the first time since April, primarily through the non-renewal of temporary contracts. Business confidence also turned pessimistic for the first time since January.
The contrasting performances between Italy and France contribute to a broader weakening trend for the Eurozone's manufacturing sector. The HCOB Flash Eurozone Manufacturing PMI slipped to 49.7 in November, a five-month low, down from 50.0 in October. This indicates a renewed deterioration in operating conditions across the wider bloc, with both new orders and employment declining. While Italy's manufacturing rebound offers a positive signal, the persistent contraction in France underscores the uneven economic recovery and ongoing challenges faced by manufacturers across the region.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.