The Eurozone manufacturing and services sectors stabilised in July as the PMI
(purchasing managers' index) hit one-and-a-half year high.
The Markit Eurozone PMI Composite Output
Index rose above the 50.0 no-change level in July
for the first time since January 2012, according to
the flash estimate. The PMI rose for the fourth
successive month, up from 48.7 in June to 50.4.
Manufacturers reported the largest monthly
increase in output since June 2011, registering an
expansion for the first time since February of last
year. Service sector activity meanwhile fell only
marginally, recording the smallest decline in the
current 18-month sequence and showing signs of
stabilising after the marked rates of decline seen
earlier in the year.
New orders fell only marginally during the month,
registering the smallest decline since August 2011.
The rate of loss of new orders has now eased for
four straight months, helping the rate of decline in
backlogs of work ease to the slowest for nearly two
years in July.
New orders for manufactured goods rose for the
first time since May 2011, buoyed by a slight
increase in new export orders. Incoming new
business in the service sector meanwhile continued
to decline, although the drop was the smallest seen
since March of last year.
The easing in the rate of loss of new business was
a factor helping drive expectations for service
sector business growth in the year ahead to the
highest since April. The rate of job losses eased during the month,
dropping to the lowest since March 2012. Rates of
job losses eased in both manufacturing and
services to 18- and 13-month lows respectively.
Input costs showed the first noteworthy increase for
four months, although the rate of inflation remained
lower than seen at the start of the year. Lower
manufacturing input prices contrasted with faster
growth of service sector costs.
Intense competition caused prices charged for both
goods and services to fall again, however, dropping
at an identical rate to June on average.
By country, output rose at the fastest rate for five
months in Germany. Service sector growth hit a
five-month high while manufacturers reported the
steepest monthly increase in output since February
of last year. Overall job creation hit the highest
In France, the rate of decline eased to the slowest
seen since output began falling in March 2012. This
was buoyed by a return to growth in manufacturing,
which reported the largest rise in production for 17
months. The service sector meanwhile saw the
smallest downturn in activity for 11 months.
Employment fell across both sectors, though to the
weakest extent since April 2012 Outside of the two biggest member states output
fell only marginally, posting the smallest decline
since June 2011. New business fell at the slowest
rate since May 2011. The „periphery‟ likewise saw
a corresponding easing in the rate of job losses to
the weakest since September 2011, though the rate
of job cutting remained solid.
Williamson, chief economist at Markit said: “The best PMI reading for
provides encouraging evidence to suggest that the
euro area could – at long last - - pull out of its
recession in the third quarter. The revival is being led by a broad-based upturn in
manufacturing, where growth surged to a two-year
high. Increased goods production was reported in
Germany, France and across the rest of the region
as a whole.
“There are also promising signs of stabilisation in
the service sector, which hints at some much–
needed upturns in domestic demand. Rising service
sector activity in Germany is being accompanied by
slower rates of decline in France and elsewhere
across the region.
“Employment continues to fall, but even on the jobs
front there is welcome news in that companies are
cutting back on headcounts to a lesser extent than
earlier in the year.
“The survey data will therefore provide a summer
fillip to policymakers, especially in terms of there
being light at the end of the tunnel for austerity-hit
periphery countries where political and social
tensions have risen. The ECB in particular will be
feeling much more confident in its expectation of
the region returning to growth by the end of the
The Eurozone PMI (purchasing managers' index) is produced byLondon-based Markit and is
based on original survey data collected from a
representative panel of around 5,000 companies based in the euro area
manufacturing and service sectors. National manufacturing data
are included for Germany, France, Italy, Spain, the Netherlands, Austria, the
Republic of Ireland and Greece. National services data are
included for Germany, France, Italy, Spain and the Republic of Ireland. The
flash estimate is typically based on approximately 85%–90% of
total PMI survey responses each month and is designed to provide an accurate
advance indication of the final PMI data.
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