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Euro zone’s composite Purchasing Managers’ Index (PMI) touched a seven-month high in July, in contrast to market consensus for a marginal fall. There were very mixed readings within the data even though there was a gain in output across both the services as well as manufacturing sectors.
The composite PMI printed at 53.3 compared to 53.2 the month before, beating expectations for it to edge down to 53.1. The services PMI rose to 53.1 from 52.9 in July, which was a three-month high and ahead of expectations for a reading of 52.8.
Meanwhile, the manufacturing PMI slipped to 51.8 from 52.0, missing forecasts for it to be unchanged and reaching a three-month low.
"The August flash PMI indicates that the eurozone remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by Brexit uncertainty," said Chris Williamson, Chief Business Economist, IHS Markit.
There was a slowdown in manufacturing orders growth with the weakest rate of expansion for 18 months, while the rate of new business in the services sector was the strongest for four months. There was also a decline in manufacturing inventories at the fastest rate for six years as confidence weakened.
However, no significant negative impact was witnessed from the United Kingdom referendum outcome. Although there was an improvement in the French services sector, growth outside Germany was generally weak once again. Employment overall increased for August, although the rate of expansion was the slowest for three months.
Further, input prices increased for the fifth consecutive month, while output prices continued to decline and at a faster pace than seen in July. Meanwhile, overall business expectations in the services sector declined to the lowest level since December 2014, which is particularly surprising given very supportive monetary policy and there will be further concerns over structural weaknesses.
