September manufacturing production was flat year-on-year, having expanded 2.2% in August. Expansion was held back by contractions in food and beverages (-2.6%), textiles and clothing (-1.5%) and machinery (-7.1%) production. The manufacture of motor vehicles and parts expanded 8.8% y/y in line with the improvement seen in export volumes in October, and wood and wood products added 2% y/y contributing 0.3% to growth.
Despite a 1.5% m/m seasonally adjusted improvement activity in the sector remains lacklustre as had been signaled by the September Purchasing Manager’s Index (PMI) which improved to 48.5 from 46.3 in August (still below the key 50 level). Of concern, is that the October PMI fell to 45.9, which suggests October manufacturing numbers could be significantly worse than September’s print. Quarter-on-quarter, manufacturing production contracted -1.3% in 3Q16, and suggests that the sector’s GDP will grow by just 0.5% y/y in 3Q16.