Eurozone factories feel heat in June, job cuts rise

LONDON / ATHENS

The file photograph shows employees of the car manufacturer Ford working at a plant in Cologne, Germany. A survey shows eurozone manufacturing took a blow in June. EPA photo

Euro zone manufacturing took another hefty blow in June and factories are preparing for worse to come, according to business surveys yesterday that showed jobs were cut at the fastest rate in two-and-a-half years.

Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) was unchanged at 45.1 in June, above the preliminary reading of 44.8 and holding at its lowest reading since June 2009.

Anchored below 50 mark that divides growth and contraction for almost a year now, the survey again showed factories in the region’s two biggest economies, Germany and France, are succumbing to a downturn that started in southern Europe.

“Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years,” said Chris Williamson, chief economist at data provider Markit.Released on the heels of a summit of European Union leaders in which they agreed to help Spain and Italy borrow more affordably, the survey only highlighted the huge challenge policymakers face in restoring the currency union’s economic fortunes. The factory output index rose just a tad to 44.7 from 44.6 in May, but still signifying a sharp contraction.

Similar surveys released yesterday showed German and Spanish manufacturing shrank at its fastest pace in three years in June.

Greece’s manufacturing slump worsened in June as uncertainty ahead of a crucial general election that month weighed on business activity, leading to sharp drops in production and employment, a survey showed on Monday. Markit’s manufacturing purchasing managers’ Index (PMI) for Greece dropped to 40.1 points in June from 43.1 in May, its weakest reading since February.

Alarmingly, the survey’s employment index fell to 46.7 in June, its lowest since January 2010, from 47.1 in the previous month, signalling accelerating job cuts.

Unemployment hit its highest rate with 11.1 percent since the eurozone was created in 1999 and analysts warned job queues would likely continue to lengthen in coming months. More than 17.5 million people were jobless in the 17-nation single currency area in May, as 88,000 more men and women lined up for work. Spain was the hardest hit with almost one in four unemployed, according to Eurostat data agency.