Eurozone manufacturing PMI was almost unchanged in August

According to the report from IHS Markit, the recovery of the euro area’s manufacturing sector from the severe constraints on economic activity related to fighting the global coronavirus disease (COVID-19) continued during August. Output and new orders both rose at marked rates and ensured that the Eurozone Manufacturing PMI remained above the 50.0 no-change mark for a second successive month. 

The headline index posted 51.7 in August, unchanged on the earlier flash reading and little-moved on July’s 51.8. Growth was again widespread, with all three market groups registering an improvement in operating conditions compared to the previous month. The consumer goods category was again the best performing, retaining a solid pace of expansion. Relatively modest gains were seen in the intermediate and investment goods categories. 

Eurozone manufacturing output growth was recorded for a second successive month during August and accelerated to reach its highest level for over two years. New orders also increased for a second month in succession, with growth again marked despite easing slightly on July’s near two-and-a-half-year peak. The domestic market was again the primary driver of new order books, with export orders continuing to rise, but at a relatively modest pace. To help meet the growth in new orders manufacturers continued to utilise stocks of finished goods, which fell to the greatest degree since the start of 2010. Continued gains in new business led to a slight increase in backlogs of work during August, the first growth in two years. Nonetheless, manufacturers continued to make sharp reductions in employment: Latest data showed that job numbers were cut for a sixteenth successive month, albeit at the slowest rate since March. 

Finally, confidence about the future continued to pick up during August, reaching its highest level for over two years as firms looked forward to the ongoing recovery from the impacts of the pandemic on economic activity.