Euro area industrial activity ramps up in July even as demand conditions are still weak – PMI data
- July final manufacturing PMI 51.9 vs 52.0 prelim
- Prior 51.4
Euro area manufacturing activity recovers to a three-month high, largely underpinned by Germany. Overall demand conditions in the region remain fragile at best but at least there is slight evidence of a rise in new orders.
The manufacturing output index was the more impressive number here, rising to 52.9 – a 52-month high. The quicker
expansion was underpinned by the completion of backlogged
orders alongside a slight pick-up in sales.
That being said, supply chain pressures
nevertheless remained intense, although they were the least
pronounced in five months. Adding to that as well is that inflation pressures also eased in July.
S&P Global notes that:
“Eurozone factories are enjoying something of a summer
growth spurt, with production rising at its fastest rate for
four and a half years. However, there are signs that this
good news may prove short-lived, with momentum at risk
of fading as autumn approaches.
“Germany, the Netherlands, Austria and Greece are
reporting robust production growth, but output is falling
in France and Spain, while Italy is seeing only a modest
gain. These divergences underscore how large parts of
the region continue to struggle amid weak demand, high
prices and supply delays.
“Although supply bottlenecks and energy-linked price
pressures eased slightly in the July survey period, supply
chain stress and energy prices remain elevated amid
ongoing tensions in the Middle East, threatening to
constrain production and further dampen demand in the
coming months.
“New work inflows therefore remain worryingly weak,
meaning producers are having to rely on orders placed in
prior months to drive the latest increase in production.
As a result, factories continue to reduce headcounts
amid concerns over a potential lack of work in the coming
months, highlighting that the manufacturing economy
is not quite as healthy as the headline numbers might
suggest."
This article was written by Justin Low at investinglive.com.