Euro Zone Manufacturing growth slows
Eurozone manufacturing recovery slowed in August. Strong growth continued in Germany and France, but downturn in Greece deepened
Final Eurozone Manufacturing PMI at six-month low of 55.1 in August, as growth of output and new orders moderated.
Germany, France and Austria recorded fastest rates of output growth.
Job creation continued, but still centred on Germany, the Netherlands and Austria.
The Markit Final Eurozone Manufacturing PMI™ fell to a six-month low of 55.1 in August, down from 56.7 in July, but above the earlier flash estimate of 55.0. Although the PMI signalled a slight loss of growth momentum, the rate of expansion remained robust and faster than the survey average. Business conditions in the manufacturing sector have now improved in each of the past eleven months.
Manufacturing production and new orders both rose for the thirteenth successive month in August. However, there were noticeable slowdowns in growth of both variables since July, with the increase in total new orders the smallest in the year-to-date.
Marked disparities also remained between the performances of the national manufacturing sectors. The big-two of Germany and France – along with Austria – recorded by far the fastest increases in output. Rates of expansion were comparatively modest in Italy, Spain and the Netherlands, while the recession in Greece extended into an eleventh consecutive month. The rate of contraction in Greece accelerated sharply since July, following a similar quickening in the pace of reduction in new orders.
Growth of output accelerated slightly in France and Spain, but decelerated in Germany, Italy, the Netherlands, Austria and Ireland.
Producers of consumer, intermediate and investment goods all reported slower rates of increase in both output and new orders in August. The investment goods sector recorded the strongest expansion overall, mainly reflecting robust growth at German capital goods producers.
New export orders rose for the thirteenth month running in August. However, the rate of increase eased for the fifth month running to the weakest since January. All of the nations covered reported higher levels of new export orders, including a slight rise in Greece for the first time since last September.
Eurozone manufacturing employment increased for the fourth successive month in August. Although the rate of jobs growth was again only moderate, it was in line with July’s 26-month high and slightly sharper than the earlier flash estimate.
However, job creation remained firmly centred on Germany, the Netherlands and Austria. Staffing levels fell elsewhere in the euro area, with rates of reduction accelerating in Greece and Ireland.
August saw input price inflation ease further from May’s 22-month high to its slowest since February, despite ongoing supply-chain pressures. Cost inflation was highest in France, the Netherlands and Austria. Rates of increase slowed in Germany, Italy, Ireland and the Netherlands, but picked up elsewhere. Consumer goods producers reported the sharpest rise in costs, followed by the intermediate goods sector.
There was a modest pass through of higher costs to the factory gate in August, as manufacturers raised their selling prices for the fifth month running. However, the rate of inflation was the weakest during that period and much slower than that signalled for input costs. Average charges rose at slower rates in Germany, France, Italy, Austria and the Netherlands. Ireland and Spain reported marginal increases in selling prices after reductions one month ago, while the rate of charge deflation eased in Greece.
There were signs that Eurozone manufacturers’ capacity was under pressure in August, as companies reported settling sales in part through the depletion of existing stocks of finished goods whilst registering another increase in backlogs of work. Stocks of purchases also fell during the latest survey period, despite a solid increase in purchasing activity.