As investors eye this Thursday’s meeting of European Central Bank policymakers for further signals that the bank has moved closer to launching a large-scale programme of bond buying, or “quantitative easing”, the latest manufacturing data out of Europe certainly won’t do much to dispel fears of a recovery in reverse.
The closely-watched manufacturing purchasing managers’ indices (PMI) compiled by Markit Economics slipped to a 15-month low in France, a 14-month low in Italy and an 11-month low in Germany, as warning lights flash on the sector’s health in Europe’s largest economies.
In terms of the eurozone as a whole, it was a 13-month low, as companies faced slower increases in both total new orders and new export business, Markit said.
The eurozone manufacturing PMI for August came in at 50.7, above the critical line that separates expansion from contraction, but still the lowest reading since July 2013.
Markit economist Rob Dobson said: “The eurozone manufacturing sector lost further growth momentum in August, with the recovery in production slowing for the fourth straight month to the weakest in the current 14-month sequence of expansion.
“Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible. This is also the case on the demand front, with growth of new orders and new export business both slowing in August.
“The slowdown in industry is likely to add further fuel to the fire for analysts expecting additional monetary or fiscal stimulus to be implemented.”
