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In Germany the manufacturing recession has been particularly marked – a major problem for the EU considering its massive size.

Carmakers in particular have reported difficulties, and the automotive industry’s troubles were also behind the fall in confidence from other businesses.

The respective rates of contraction remained sharp by historical standards, amid reports from panellists of headwinds to demand from economic and political uncertainty, high interest rates and troubles in the automotive sector.

Overall, the manufacturing PMI remains downbeat. It has underestimated growth in manufacturing in recent quarters so we doubt industrial production will have fallen as much as it suggests in Q4, but we look for a renewed fall in output nonetheless. By country, weakness is concentrated in Germany

Europe’s manufacturing sector stands at a critical juncture, balancing newfound momentum in the south with deepening challenges in the north. Traditional powerhouses like France and Germany continue to experience declines, as northern Europe faces challenges to reclaim its competitive edge. Also, Italy is seeing output falling at a faster pace than in September.

Spain is structurally on a different outlook. It is in solid expansion territory and is bumping up the overall number with its healthy order book. Greece – the second country with a PMI above 50 – is hiring and expanding output, but at the same time, is seeing new orders declining.