Decline in production in Europe slowed down in December

Having reached a three-month high in November, the IHS Markit Eurozone Manufacturing PMI lost momentum in December. Following the publication of 46.3, up from 46.9 but slightly better than the previous Flash reading of 45.9, the PMI remained below the critical 50.0 for the eleventh straight month. Underlining continued underlying weakness in the sector's performance, the PMI averaged 46.4 in the most recent quarter, unchanged from a nearly seven-year low in the previous quarter. Data by market group showed that weak manufacturing performance was focused on the intermediate goods and investment goods sectors, with the corresponding PMIs remaining far in negative territory. Conversely, margin growth was recorded in the consumer goods category for the first time since August.

Chris Williamson, Chief Economist at IHS Markit said: “Eurozone producers have reported a tough end to 2019, with output not exceeding from 2012 onwards. Research indicates a 1.5% drop in production in the fourth quarter; acting as a major obstacle to the wider economy. While companies have become more optimistic in the coming year, a return to growth is far from being, given that new orders continued to fall at one of the fastest rates in seven years. As a result, companies have sought to reduce inventory levels and staff headcount with a focus on reducing production capacity and reducing costs. This cost reduction was again evident in the further sharp drop in demand for machinery, equipment and manufacturing resources. Households alone provided any source of demand boost in December, highlighting how the consumer sector has helped keep the economy from recession in recent months. The ability of the economy as a whole to avoid a downturn in the face of such a sharp decline in production remains a key challenge for the eurozone on the cusp of 2020. ”

Key findings
Final Eurozone Production PM I at 46.3 in December (Flash: 45.9, November Final: 46.9)
Accelerated drops in both weekend and new signal orders at the end of 2019
Prevalence will place capacity to further job losses

Was broadly softening PMIs for December, seven of the eight countries surveyed recorded weaker PMIs compared to November (with the exception of Austria, which recorded a constant value).

Germany was again the weakest country, while the deterioration in Italy and the Netherlands was the worst in six and a half years. Conversely, economic growth in Greece was robust, while in France �