Euro area factory growth continues to expand in August, driven by Germany – PMI data
- Eurozone August final manufacturing PMI 52.7 vs 52.8 prelim
- Prior 51.9
The final estimate reaffirms a solid showing in euro area industrial activity in August, with both factory output and new orders rising at their quickest rates since early-2022.
The added good news is that inflation pressures also continued to ease, although rates of increase in both input costs and output prices were still above those seen immediately prior to the US-Iran conflict.
The biggest positive swing to the overall report comes from Germany, which recorded its best month of manufacturing sector growth in over four years. So, that will come as a bit of a relief after the constant woes surrounding the industry in recent years.
Besides that, business confidence strengthened again in August, signalling a fourth successive monthly rise in growth expectations for the coming 12 months. That as the overall level of optimism was also seen above its long-term average.
S&P Global notes that:
"The August PMI report provided the clearest signs yet that the eurozone's industrial economy has so far shaken off both the oil price shock and supply-related disruptions caused by the Middle East war. Stronger order book growth, in part owing to a recovery in export demand, should give this expansion legs.
"Breaking the PMI data down by the three main industrial groupings revealed the intermediate goods sub-sector as the main contributor of manufacturing growth. This includes critical industries such as chemicals and metals, as well as electrical equipment and electronic components, suggesting the euro area can also be a beneficiary from the tech supercycle, even if it's arriving late to the party.
"A further softening of producer price increases, even in the midst of sustained oil market volatility, helps to alleviate broader inflation worries. That said, the pace of disinflation is starting to level off and the PMI's price metrics remain well above their pre-war levels, which may just embolden a cautious stance by eurozone monetary policymakers."This article was written by Justin Low at investinglive.com.
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