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Eurozone PMI manufacturing finalized at 47.0, Germany in steepest decline, Franc bucks the trend

Eurozone PMI Manufacturing was finalized at 47.0 in August, unrevised. That was slightly higher than July’s final reading of 46.5. Markit noted that production and new orders continued to fall as confidence hits lowest since November 2012. Also, employment declined for the fourth month running during August.

Among the states, improvement were generally seen but readings stayed dismal. Germany was revised slightly lower to 43.5, well below 50. Australia was at 48.6. Italy was at 48.7. Spain was at 48.8. Ireland even fell to 76-month low at 48.6. France (51.1), the Netherlands (51.6) and Greece (54.9) were the brighter spots.

Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“Eurozone producers are suffering as the summer slump in factory production persisted into August. Although up on July, August’s manufacturing PMI was the second-lowest since early 2013, and a marked deterioration in optimism about the year ahead suggests companies are expecting worse to come.

“The deteriorating manufacturing conditions mean the goods-producing sector is likely to act as an increased drag on eurozone economic growth in the third quarter. At current levels, the survey is consistent with goods production declining at a quarterly rate of 1%.

“Prices are falling as companies offer discounts in the face of disappointingly weak demand, and payroll numbers are being culled at one of the steepest rates seen over the past six years as companies increasingly seek to cut costs in the uncertain trading environment.

“Trade wars and tariffs remain the biggest concerns among producers, and the escalation of global trade war tensions in August encouraged further risk aversion.

“Germany is suffering the steepest decline, in part reflecting slumping global demand for autos and business machinery. While France bucked a wider downturn trend, even here growth was only very modest.”

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