Like UK factories, eurozone factories slowed last month, mainly due to declines in Spain and Italy. From 55.1 in July, manufacturing PMI in the eurozone dipped to 54.6 which was in line with expectations. It is the weakest pace of expansion in the sector since November 2016, so is some cause for concern. In addition, employment rose the least since February 2017.
In Germany, the reading was worse than expected and fell to 55.9 from 56.9 the previous month. The figure had been forecasted to come in at 56.1. New export orders rose the least in more than two years, as export sales growth hit its weakest since May 2016. However, production growth was more robust and employment increased by the largest margin in four months.
The euro enjoyed a good day against sterling and the dollar, but it will be interesting to see if the moves can continue throughout the week. It’s fairly quiet today, but tomorrow we will see composite and services PMI from Germany and the eurozone, as well as retail sales for July. The headline release this week is the eurozone’s third estimate of the GDP growth rate for the second quarter of 2018.
