Eurozone manufacturing growth remains subdued at start of Q3
Although the final IHS Markit Eurozone Manufacturing PMI posted 55.1 in July, unchanged from the earlier flash estimate, this was only a minor recovery from June’s 18-month low of 54.9 and over five points below the record high registered at the end of 2017.
Sector data signalled that business conditions improved across the consumer, intermediate and investment goods sectors, with mild growth upticks signalled in the latter two.
Similar to the trend at the all-manufacturing level, rates of expansion were weaker than at the turn of the year in all three subindustries.
July saw the Netherlands, Germany and Austria remain the strongest-performing nations.
Growth improved slightly in the latter two, but eased to a 14- month low in the Netherlands.
Rates of expansion also slowed in Italy, Spain and Ireland, whereas an acceleration was registered in France.
Eurozone manufacturing output increased again in July.
Despite a mild improvement, the rate of expansion was the second-weakest since November 2016.
The more subdued trend in output growth in recent months reflects a concurrent slowdown in the pace of increase in new orders.
The latest rise in new business was identical to the 22-month growth low registered in June.
Inflows of new work have been stymied recently by a weakening trend in the pace of increase in new export orders, amid uncertainty about the economic outlook and worries about tariffs and trade wars.
July saw new export business increase at the slowest pace since August 2016.
Weaker growth was seen in Italy, the Netherlands, Greece and Ireland, while France and Austria saw exports decline.
Although Germany and Spain saw improved expansions, these were much weaker than those registered at the start of the year.
Work-in-hand (but not yet completed) continued to increase in July, although the pace of expansion eased to its weakest for two years.
Companies responded to the ongoing pressure on capacity by increasing employment, with staffing levels rising for the forty-seventh successive month.
All of the nations covered by the survey registered an increase in employment during July.
Similar to the trend in output growth, the fastest job creation was recorded in Austria, the Netherlands and Germany.
Only France, Austria and Greece saw staffing levels rise at quicker rates than in June.
Price pressures remained elevated in July, with input costs and output charges both rising at above survey-average rates.
That said, purchase price inflation was slightly weaker than in June, while the increase in output charges was the least marked since September 2017.
Increases in input costs were linked to tariffs, trade wars, supply-chain delays and raw material shortages.
Business optimism about future business conditions improved slightly, as companies retained confidence that output levels would be higher in one year’s time.
However, the overall degree of positive sentiment remained among the lowest seen over the past two years.
Business confidence improved in Germany, France, Italy and the Netherlands. ■