EUROZONE MANUFACTURING PMI AT 51.4

The recovery in the eurozone manufacturing sector entered its second month during August. At 51.4, up from a flash reading of 51.3, the seasonally adjusted Markit Eurozone Manufacturing PMI® rose for the fourth successive month to reach its highest level since June 2011.

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National PMIs improved in all nations bar France, while France and Greece were the only countries to register readings below the 50.0 no-change mark.

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Growth rates for production, new orders and new export business all accelerated to the fastest since May 2011, with back-to-back increases also signalled for each of these variables. Meanwhile, the outlook for output remained on the upside as the new orders-to-inventory ratio hit a 28-month high and backlogs of work rose marginally.

The upturns in production at German, Italian, Dutch and Austrian manufacturers all strengthened on the back of improving inflows of new business. Output also rose further in Ireland and returned to growth in Spain as a result of an increase in new business.

All of these nations also reported higher levels of new export business, with rates of increase hitting 28-month highs in Italy and the Netherlands, a 32- month record in Spain and a 29-month high in
Austria. German exports rose following five months of decline, while the rate of growth in Ireland held broadly steady at July’s seven-month peak.

In contrast, output, new orders and new export orders fell at French manufacturers. Production also declined in Greece, despite stabilisations in both total new business and foreign demand following prolonged spells of contraction.

Inflationary pressures remained subdued in August, as average input costs and selling prices were both broadly unchanged over the month. Overall, the Eurozone Manufacturing Input Prices Index rose by 6.8 points month-on-month – the second-greatest increase in the survey history. This represented a marked easing in deflationary pressure.

The stabilisation in average input prices partly reflected a slight improvement in demand for raw materials, as rising levels of production led to an increase in purchasing activity for the first time since June 2011. Supplier lead times, which act as a barometer for supply-chain price pressures, also lengthened for the second month running.

Employment remained a weak point for the manufacturing sector in August, with job losses recorded for the nineteenth straight month. The
pace of reduction was slightly faster than in July – mainly due to steeper rates of decline in Germany, Italy and Spain – but still weaker than the average for the current sequence of job shedding.

 

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