Purchasing managers‘ indices in the Eurozone: Industry setting the economic pace

According to the preliminary results of the survey among the Eurozone purchasing managers, the pace of economic activity will remain high in August. Particularly in the engine room of European industry, the pistons are still powering ahead, with the sentiment barometer for industry trending upwards again compared with the slight dent recorded in July and returning to the all-time high last marked in June. The index for the services sector trended downwards somewhat, but it continues to signal solid business growth.

The Composite Index for the Eurozone improved slightly in August according to the preliminary figures, from 55.7 to 55.8 index points. All in all, the two largest economies of the Eurozone, Germany and also increasingly France, are proving more and more to be the driving force of economic activity. According to the market research institute Markit, the improvements in the purchasing managers‘ indices in these two countries turned out somewhat stronger than in the remainder of the currency area. And, most importantly, industry is increasingly boosting the overall economic development.

In Germany a clear upward trend could be noted, with the two sentiment barometers for industry and services posting renewed gains. The Composite Index therefore improved from 54.7 in the previous month to 55.7 index points. All in all, therefore, the assessment of the economic situation remains very good. A striking point is the marked discrepancy between industry and the services sector. The barometer for industry recorded 59.4 points in August while the services index lies six index points lower. Summing up, today’s survey gives reason to expect that economic momentum will remain high in Germany. The signs suggest that the ongoing strong economic growth from the first half of the year will continue without interruption. Political risks (Trump or North Korea) or economic headwind (strong euro) are evidently playing a subordinate role at the moment.

In France, the private sector is also in robust form according to the survey result, with the Composite Index recording an unchanged result in August compared with the previous month of 55.6 points. The high level gives rise to hopes that the economic growth will continue. While in France the sentiment barometer for industry gained strongly once again on the previous month, reaching the highest level in 76 months, the index for the services sector lost some ground. According to the survey, the persistently weak French industrial sector is increasingly gathering strength and is evidently evolving into a cornerstone of French economic development. The main reason for this trend is a very favourable assessment of new orders, which are continuing to boost production. The employment prospects of companies also remain optimistic, even if they have weakened up compared with the previous month.


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