Eurozone manufacturing deteriorates in October

(BRUSSELS) - The Eurozone manufacturing climate deteriorated in October, with the sector in economic powerhouse Germany contracting for the first time for more than two years, a closely-watched survey showed on Wednesday.

Eurozone manufacturing output, new orders and new export orders all contracted at the fastest rates in almost two-and-a-half years, according to the purchasing managers' index (PMI) compiled by Markit research firm.

The PMI fell to 47.1 points in October, down from 48.5 in September and lower than a previous estimate of 47.3, marking the third month of contraction in a row. The PMI is a leading indicator of future activity, and any score below 50 indicates contraction.

"The latest manufacturing PMI further emphasises the marked reversal of fortunes for a sector that was the leading light of the economic recovery," said Rob Dobson, senior economist at London-based Markit.

"Output, new orders and new export orders all suffered their fastest declines since mid-2009, against a backdrop of weak domestic market conditions, the ongoing debt crisis and a darkening outlook for the global economy," he said.

"Signs of weakness are also becoming more prominent not just in the periphery but also the core, with the German PMI joining all of the other nations except Ireland in contraction territory."

German manufacturing, a major driver of eurozone economic recovery, contracted for the first time since September 2009 as it hit 49.1 points.

In Austria and the Netherlands, the decline was at the fastest rate for 27 months while France was in the red for the third month in a row.

The rates of contraction "accelerated sharply" in Greece, the country at the epicentre of the eurozone debt crisis, but also in Italy, which is considered the next country at risk of needing a bailout.

The PMI is based on a survey of around 3,000 manufacturing firms in the eurozone.