Eurozone PMI Rises Slightly, but Trouble Remains

Research firm Markit has posted its monthly Purchasing Managers’ Index for the eurozone. A slowing world economy was reflected in the numbers, although they rose slightly from recent lows.

According to its new research:

  • Flash Eurozone PMI Composite Output Index(1)
    at 51.8 (51.5 in July). 2-month high.
  • Flash Eurozone Services PMI Activity Index(2)
    at 53.4 (53.2 in July). 2-month high.
  • Flash Eurozone Manufacturing PMI Output
    Index(4) at 47.8 (46.9 in July). 2-month high.
  • Flash Eurozone Manufacturing PMI(3) at 47.0
    (46.5 in July). 2-month high.

A figure of under 50 represents contraction. There was an obvious split between manufacturing and services, a sign, perhaps, of global trade woes.

The genuinely bad news was about future sentiment. It reached the lowest level since May 2013. The sentiment index covers confidence about the economy for the next 12 months, starting in August. Markit mentioned this could affect job creation for the balance of the year.

Commenting on the flash PMI data, Andrew Harker, associate director at IHS Markit, said:

The dynamics of the eurozone economy were little changed in August, with solid growth in services continuing to hold the wider economy’s head above water despite ongoing manufacturing decline. While the rate of overall expansion ticked up, we’re still looking at GDP only rising by between 0.1% and 0.2%, based on the PMI data for the third quarter so far economic slowdown has impacted firms’ confidence, with sentiment the lowest in over six years. It appears that companies are braced for a sustained period of weakness, and as a result are showing greater reluctance to take on additional staff.

The slow gross domestic product forecast is close enough to a recession that a tip in that direction could happen easily.