Euro Zone Manufacturing Stabilises in October

LONDON (Reuters) – Euro zone manufacturing showed some signs of stabilisation in October. While activity contracted for a 28th month, it did so at a shallower pace. A survey revealed that the ongoing decline in demand had also eased.

HCOB's final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 46.0 in October, ahead of a 45.9 preliminary estimate but still below the 50 mark that separates growth from contraction.

An index measuring output, which feeds into a composite PMI due on Wednesday and is considered a good guide to economic health, jumped to 45.8 from 44.9 in September, also surpassing the 45.5 flash estimate.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted, "There is one bit of good news in these numbers: the recession in the manufacturing sector did not deepen further in October."

He added, "Production dropped at a slower pace than in the previous month, and new orders fell less sharply."

The new orders index, a measure of demand, bounced to a four-month high of 44.2 from 42.2, although it still signalled a decline.

Additionally, factories reduced their prices at the fastest rate since April, partially justifying the European Central Bank's (ECB) ongoing policy easing cycle. The ECB cut interest rates last month for the third time this year, stating that inflation in the euro zone was increasingly under control, and is expected to do so again in December.