Euro Uncertainty Hits Manufacturers Worldwide
The Markit/CIPS Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell to a 37-month low of 44.0, down from 45.1 in June; this is a consistent direction of travel to that in the UK .
The PMI has now signalled contraction for 12 consecutive months in Europe and is at a 37 month low, whilst Asian Manufacturing PMI also fell to its second-lowest level since April 2009.
Stephen Cooper, UK head of diversified industrials at KPMG, comments on the Markit/CIPS manufacturing PMI: “The Eurozone crisis and the uncertainty that it creates, is now being directly felt across the world, with the downturn in manufacturing hitting the power-house that was Asia and Germany recording the steepest drop in new orders and the fastest rate of decline since May 2009.
“With the picture not set to get any brighter in the short term, manufacturers have to review their business models and focus on their core businesses. They are already shedding jobs and have followed the route of the retail sector in cutting their average selling prices for the second month running – but this is not sustainable in the long term.
“As the problems in the Eurozone rumble on, we would expect demand and output both in Europe and Asia to remain challenging, so manufacturers need to think about investing in long-term growth through innovation, partnerships and new markets for top and bottom-line growth.”