European factories axe jobs in worst round of cuts since 2013

Tom Belger
Finance and policy reporter
European manufacturers are cutting jobs. Photo: Axel Heimken/picture alliance via Getty Images

European manufacturers have started on the steepest round of job cuts since 2013, according to new figures that show near-stagnant economies across the eurozone.

Overall employment growth across countries using the single currency hit its lowest level in almost five years in October, according to widely watched figures from IHS Markit published on Thursday.

The headline figure on the flash eurozone purchasing managers’ index showed a sluggish growth rate of 50.2, only marginally above the 50 mark which would represent no change in output.

It was also a 0.1% rise on September, but last month’s figures had marked a six-year low.

One analyst said it pointed towards a quarterly growth rate of 0.1% for the eurozone.

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Manufacturing showed a ninth straight month of contraction, with its PMI figure unchanged from September at 45.7, a seven-year low and below expectations.

Germany’s economy fared worse with another month of declining business activity as trade tensions batter its exports, though it marked a slight uptick on September. France fared better, helping to keep the whole out of contraction as the rate of new orders and jobs growth increased.

Expectations for the future also sank to their lowest level since 2013, with managers gloomy about the future amid strong signs of a global slowdown, trade tensions biting leading economies and jitters over Brexit.

The figures suggest the European Central Bank’s stimulus measures announced last month have either not yet filtered through into wider economies, or have failed to hit home so far.

They also heap pressure on President Mario Draghi as he leads his final bank meeting on Thursday, amid growing disquiet among other rate-setters at his fondness for aggressive stimulus.

Chris Williamson, chief business economist at IHS Markit, said: “The eurozone economy started the fourth quarter mired close to stagnation, with the flash PMI pointing to a quarterly GDP growth rate of just under 0.1%.

“The manufacturing downturn remains the fiercest since 2012, and continues to infect the service sector, where October saw the smallest increase in new work for almost five years.

“The labour market is meanwhile being hit as firms retrench amid signs of excess capacity and uncertainty about the year ahead intensifies.”

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