Eurozone manufacturers got scared of Trump’s trade war cry

• The Eurozone manufacturing PMI declined to a level of 52.0 in October as new orders were lower amid ongoing Trump led trade war.
• The net fall in new work was the first recorded by the survey since November 2014 and new export orders contracted for the first time since mid-2013.
• Deterioration of the Eurozone manufacturing activity points to the risk of the economic downturn, in contrast with ECB’s balanced view. 

The Eurozone manufacturing PMI declined to a level of 52.0 in October compared with 53.2 in September and broadly unchanged on the earlier flash PMI reading of 52.1. At the same time, 
latest purchasing managers index (PMI) from IHS/Markit decreased to a 29-month low of 52.2 in October as new orders placed with German manufacturers decreased. 

The fall in new orders caused the overall performance of the German manufacturing sector to fall to the lowest level in nearly two-and-a-half years dragging the whole Eurozone manufacturing PMI lower. Order books for the whole Eurozone also fell with exports declining for the first time in nearly five-and-a-half years.

Looking and the national decomposition of the Eurozone PMI, Italian manufacturing PMI was the worst performer falling to the lowest level in nearly four years within contraction territory. 
Growth in Germany was the weakest in nearly two-and-a-half years, while France and Spain
registered only modest gains in manufacturing activity.

The Netherlands continued a strong growth, though even here the pace of expansion was the lowest in 21 months. Manufactures in Ireland, Austria and Greece all continued to record solid, but slower, rates of expansion.

The international trade tensions spurred by the unilateral action of the US President on trade tariffs weighed on business confidence in the Eurozone with the expectations sub-index falling to the lowest level in nearly six years, with risks tilted towards the downside in the final quarter of this year.

“The combination of destocking, deteriorating order books and drop in business optimism will add to concerns that growth risks are shifting to the downside rather than being “broadly balanced”, as indicated by the ECB,” Chris Williamson, the IHS/Markit chief economist wrote in the report. 

The Eurozone PMI and industrial production