Euro zone August factory activity stuck in a rut, PMI shows
LONDON, Sept 2 (Reuters) -Euro zone manufacturing activity remained mired in contraction in August, a survey showed on Monday, with the data suggesting a recovery could be some way off as demand fell at its sharpest pace this year.
HCOB's final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, stood at 45.8 in August, just ahead of a 45.6 preliminary estimate but firmly below the 50 mark separating growth from contraction.
An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, nudged up to 45.8 from 45.6 in July, just ahead of the 45.7 flash estimate.
"Things are going downhill, and fast. The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a gruelling 26 months and counting," said Cyrus de la Rubia at Hamburg Commercial Bank.
"New orders, both domestic and international, are slowing down even more, dashing any short-term hopes for a rebound."
The index covering new orders sank to 43.3 from 44.1, its lowest since December. Demand from abroad also fell at the fastest rate this year.
That decline came as manufacturers raised their prices for the first time in 16 months, driven by factories in France, the Netherlands, Greece and Italy.
"This could spell trouble for the ECB, which has been grappling with persistent inflation in services while relying on falling manufacturing prices to keep disinflation on track," de la Rubia said.
However, overall inflation in the currency bloc fell to a three-year low of 2.2% in August, preliminary official data showed on Friday, strengthening the case for further policy easing from the European Central Bank.
It will cut its deposit rate twice more this year, in September and December, according to an over-80% majority of economists in an August Reuters poll, fewer reductions than markets currently expect.
Reporting by Jonathan Cable; Editing by Hugh Lawson
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
