The PMI indicator falls for the second consecutive month in the region to 49.2 points, the worst in 18 months
Indicators of economic activity in the eurozone continue to paint a more than gloomy picture for the region in the run-up to the latter part of the year. The burden of the energy crisis is weighing heavily on the deterioration of the private sector, as shown by the latest Composite Purchasing Managers’ Index (PMI) released Tuesday by S&P Global Market Intelligence.
The indicator fell for the second month in a row to 49.2 points in August, from 49.9 in July. It is the worst reading in 18 months and remains below the 50 level marking the barrier between expansion and contraction.
This index is one of the most followed by the market to evaluate the economic health of a region as it assesses industry conditions and perceptions about employment, order evolution, inventories, etc., that the sector has . Its great relevance is that it is not about opinions, but about expectations with specific data on current business conditions.
Of the two components of the indicator, the services PMI also fell from 51.2 points in July to 50.2 points in August in August. While holding up at expansion levels, it is the worst reading in the past 17 months. For their part, manufacturing PMI data recorded another drop from 49.8 in July to 49.7, a 26-month low and a new record high for finished goods inventories. That is to say, the companies – including a wide range of sectors from the motorcycle to real estate and even tourism – have not been able to sell everything due to falling demand.
“These data suggest that the eurozone economy will contract in the third quarter of the year,” Andrew Harker, chief economist at S&P Global Market Intelligence, said in the report.
The big problem is that the main burden on the region is exactly two of its major economic engines: Germany and France, which also registered a notable contraction in activity in August.
With the Bundesbank warning this week that inflation in Germany could hit 10% next fall, the country’s composite PMI stood at 47.6 points in August. A remarkable drop from 48.1 in July and the worst data reading in 26 months. The services sector is at its lowest point in 26 months and the manufacturing sector is still contracting (49.8), despite the slight improvement from the previous table (49.3).
“The data paints a bleak picture of the German economy in the middle of the third quarter,” the experts note. And they warn that the slowdown is already impacting employment.
The deterioration was more pronounced in the case of France, where the PMI fell to 49.8 points from 51.7 a month earlier. It’s the worst in a year and a half, including a notable drop in the services PMI to 51 points from 53.2 in July (16 months low), while manufacturing stands at 49 whole numbers, the worst in 27 months.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
