One big takeaway from Thursday’s (20 August) closely-watched purchasing managers’ index surveys on the health of the European economy: ongoing manufacturing weakness.
With the data showing that French factory output continued to shrink in August and stalling momentum in Germany, the so-called “flash” manufacturing PMI for the eurozone came in at 50.8 for August, a 13-month low, as factory producers continued to shed jobs.
Overall, the eurozone PMI’s came in slightly below economists’ expectations.
Here’s the full rundown - a reading above 50 signals growth, while below 50 indicates contraction.
Flash Eurozone PMI Composite Output Index at 52.8 (53.8 in July). 2-month low;
Flash Eurozone Services PMI Activity Index at 53.5 (54.2 in July). 2-month low;
Flash Eurozone Manufacturing PMI(3) at 50.8 (51.8 in July). 13-month low;
Flash Eurozone Manufacturing PMI Output Index at 50.9 (52.7 in July). 14-month low.
While the composite figure remains above the crucial 50 mark, momentum appears too subdued to create jobs in a region where unemployment is still in double figures.
Chris Williamson, economist at Markit, said the region was on course for growth of around 0.3 per cent to 0.4 per cent between the second quarter and the third, a level which was “unlikely to stimulate any real turnaround in the labour market.”
The fall in the PMIs follows the publication of dire GDP figures last week, which showed the eurozone’s recovery stuttered to a halt in the second quarter.
None of the currency bloc’s three largest economies registered growth, bolstering calls for the European Central Bank to embark on quantitative easing to rid the region of the threat of economic stagnation.
