Eurozone PMI gauge weakens to 18-month low in August
A gauge of the eurozone economy in August fell to an 18-month low as consumers feel the pinch in inflation, although the same data shows pricing pressures at businesses may have to be peaked.
The flash reading of the S&P Global Composite Index of Eurozone Purchasing Managers fell to 49.2 from 49.9 in July. Any reading below 50 indicates deteriorating conditions. The flash read is based on 85%-90% of the total responses each month and usually closely tracks the end result.
The flash manufacturing index fell slightly to a 26-month low of 49.7 from 49.8, while the services PMI weakened to 50.2 from 51.2.
According to S&P Global, the drop in business activity was concentrated in Germany, which recorded the largest drop in production since June 2020. Outside of Germany and to a lesser extent France, the production increased, but only marginally.
“Cost of living pressures mean that the recovery in the services sector after the lifting of pandemic restrictions has slowed, while manufacturing remained mired in contraction in August, seeing another record build up of inventories of finished goods as companies have been unable to move products in an environment of declining demand. This glut of inventory suggests little prospect for improvement in manufacturing output in the near future,” said Andrew Harker, chief economics officer at S&P Global Market Intelligence.
Monday fell back below parity against the dollar and has fallen 13% this year.