Eurozone Industrial Growth Slows but Remains Stable

The growth of industrial production in the eurozone slowed down in October, but remained stable, according to a survey cited by Reuters. The index of purchasing managers (PMI) in the eurozone’s industrial production, compiled by S&P Global, fell to 52.7 points in October from 52.9 points in September.

Despite the decline, the October value was above the preliminary estimate of 52.4 points. Values above 50 points indicate growth in economic activity. The data shows that manufacturers are maintaining resilience despite American tariffs, wars, and a sharp increase in energy prices.

Stability in the Industrial Sector

Chris Williamson, chief economist at S&P Global Market Intelligence, commented, “The latest stable PMI reading extends the best growth period in the eurozone’s industrial production for over four years.” Williamson added that the ongoing growth, observed since February, outlines an encouraging picture of the industrial sector’s resilience, which has been subject to the adverse effects of tariffs and wars in Iran and Ukraine, as well as the sharp increase in costs and delivery difficulties arising from them.

Impact on Businesses

The total number of new orders for industrial enterprises, a key indicator of demand, increased at a slower pace in October. At the same time, export orders recorded their strongest increase in over four and a half years. Six out of the eight eurozone countries included in the survey reported growth in industrial activity, with France and Italy being the exceptions.

Operating costs for industrial enterprises increased at their fastest pace in five months in October. In response, companies significantly raised their selling prices, although the pace of increase remained largely unchanged compared to September. Williamson noted, “The latest PMI data increases the pressure on the ECB to raise interest rates further in the coming months.” The tension in supply chains intensified in October, and delivery times reached their worst level since June. Industrial enterprises increased their purchases of raw materials at the fastest pace in almost four and a half years, and for the first time since December 2022, they started to accumulate stocks of raw materials.