LONDON, Oct 1 (Reuters) – Euro zone manufacturing activity slipped back into contraction in September as new orders fell at their fastest rate in six months, signaling the recovery in the region's industrial sector was fragile, a survey showed on Wednesday. The HCOB Eurozone Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 49.8 in September from 50.7 in August – which was the first reading about the 50.0-point line denoting growth since mid-2022. "For the seventh month in a row, production in the euro zone has ticked upwards compared to the previous month, but progress has been sluggish," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. However, incoming orders declined in September after a short-lived increase in August, with export markets acting as a particular drag. The decrease in new orders was mild but marked the sharpest fall since March. Factory output continued to grow, extending its expansion streak that began in March, but the pace slowed considerably from August's strong performance. The index fell to 50.9 from 52.5. Employment conditions deteriorated further as manufacturers cut jobs at the fastest rate in three months. Companies also made greater progress in reducing backlogs of work, with outstanding orders falling at the steepest pace since June. The survey revealed a split across the euro zone with the Netherlands leading the expansion at a 38-month high while growth continued in Greece, Ireland and Spain. Meanwhile, the bloc's three largest economies – Germany, France and Italy – all registered contractions. Input costs fell for the first time since June, albeit marginally, while manufacturers reduced their selling prices for the fifth consecutive month. Business confidence remained positive but weakened to its lowest level since April and below the average of the past decade. (Reporting by Jonathan Cable; Editing by Hugh Lawson)
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