Eurozone Manufacturing PMI at 13-Month Low, with Germany Worse than Expected, Italy and France in Contraction

The Markit Eurozone Manufacturing final data shows Eurozone Manufacturing PMI at 13-month low in August.

The rate of expansion in eurozone manufacturing production eased to its lowest during the current 14-month growth sequence in August, as companies faced slower increases in both total new orders and new export business. The final seasonally adjusted Markit Eurozone Manufacturing PMI® posted 50.7 in August, down from 51.8 in July, its lowest reading since July last year. The headline PMI was also below its earlier flash estimate of 50.8. National PMI data signalled a broad easing in the manufacturing recoveries underwa y across much of the currency union. Although Ireland was a noticeable exception, with its PMI at the highest level since the end of 1999, rates of expansion slowed in Spain, the Netherlands and Germany.

The rate of expansion in new work received also slowed to the weakest in the current 14-month period of growth. Economic and geopolitical uncertainties were the main factors underlying slower demand growth. Inflows of new export business posted the slowest rise since July 2013. France was the only nation to report an outright decline in new export orders in August, while rates of increase eased in Germany, Italy and Greece. Ireland, Spain and Austria reported stronger inflows of new export business.

The big-three nations of Germany, France and Italy all reported job losses, as did Greece. Staffing rose in Spain, the Netherlands, Austria and Ireland, but Ireland was the only nation to report a faster pace of hiring than in July. Signs that the manufacturing sector may be on course for further easing in the coming months was signalled by data on purchasing and stock holdings. Input buying volumes fell for the first time in over a year and inventories were reduced further as strong competition led companies to maintain a cost-cautious position. Meanwhile, the forward-looking ratio of new orders to finished goods inventories dipped to a 13-month low.

Countries Ranked by Manufacturing PMI® 

• Ireland 57.3 176-month high
• Spain 52.8 4-month low
• Netherlands 51.7 13-month low
• Germany 51.4 (flash 52.0 ) 11-month low
• Austria 50.9 Unchanged
• Greece 50.1 3-month high
• Italy 49.8 14-month low
• France 46.9 (flash 46.5 ) 15-month low 

Ireland, Spain, and the Netherlands cannot sustain a eurozone recovery. A recession in Germany is on the way, and will take the rest of Europe along for the ride. 

More sanctions on Russia will make matters worse.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com