Eurozone Preliminary Manufacturing PMI improves to 49.7 in August vs. 49.0 expected

• Eurozone Manufacturing PMI arrives at 49.7 in August vs. 49.0 expected.
• Bloc’s Services PMI falls sharply to 50.2 in August vs. 50.5 expected.
• EUR/USD keeps the red near 0.9930 on the mixed Eurozone PMIs.

The Eurozone manufacturing sector activity eased its pace of contraction in August, the latest manufacturing activity survey from S&P Global research showed on Tuesday.

The Eurozone Manufacturing purchasing managers index (PMI) arrived at 49.7 in August vs. 49.0 expectations and 49.8 last. The index hit a 26-month low.

The bloc’s Services PMI dropped sharply to 50.2 in August vs. 50.5 expected and July’s 51.2. The indicator reached 17-month lows.

The S&P Global Eurozone PMI Composite fell to 49.2 in August vs. 49.0 estimated and 49.9 previous. The gauge clocked its lowest level in 18 months.

Comments from Chris Williamson, Chief Business Economist at S&P Global

“The latest PMI data for the eurozone point to an economy in contraction during the third quarter of the year.”

“Cost of living pressures mean that the recovery in the service sector following the lifting of pandemic restrictions has ebbed away, while manufacturing remained mired in contraction in August, seeing another record accumulation of stocks of finished goods as firms were unable to shift products in a falling demand environment.”

“This glut of inventories suggests little prospect of an improvement in manufacturing production any time soon.”

FX implications

EUR/USD keeps its recovery mode intact near 0.9930 on mixed euro area PMIs. The spot is down 0.13% on the day.