The European Commission’s October sentiment survey highlighted renewed weakness in the region’s manufacturing industry. Although the October flash manufacturing PMI was 45.9 (vs 45.0 prior), industrial confidence in the EC survey dipped to -13.0 (vs -10.5 cons, -11.0 prior), its lowest since July 2020.

• Industrial respondents also lowered their employment expectations in October to -5.6 (vs -4.7 prior), while the labour hoarding indicator ticked up a touch.
• Updated responses on capacity constraints (asked on a quarterly basis) highlight insufficient demand as a key factor behind the sluggish outlook. Overall capacity utilisation fell to 76.9% in Q3 (vs 77.7% prior), with the share of businesses highlighting insufficient demand as a limiting factor rising to 40.9% (vs 39.7% prior).
• Construction and retail sentiment rose compared to September, while services was steady at 7.1 (although above the 6.6 consensus).
• Overall, the Economic Confidence Indicator (which also incorporates rising consumer confidence) was weaker than expected at 95.6 (vs 96.3 cons and prior).
• Services expected prices reached their highest since April at 14.0 (vs 12.3 prior), suggesting the disinflation in services HICP will continue to be slow.