Eurozone Private Sector Shrinks For Second Month
August 23 2022 - 04:33AM
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Eurozone private sector contracted for the second straight month
in August as the downturn in manufacturing continued and the
service sector ground to a near-halt, flash survey results from
S&P Global showed on Tuesday.
The flash composite output index slid to 49.2 in August from
49.9 in July. However, the reading was slightly above the expected
level of 49.0.
A score below 50.0 indicates that the private sector experienced
a contraction. This was the second consecutive fall following a
16-month period of expansion.
The remainder of 2022 is looking to be one of struggle for firms
across the eurozone, Andrew Harker, economics director at S&P
Global Market Intelligence said.
The overall decline was driven by a contraction in the
manufacturing sector, where output eased for the third month in a
row. At the same time, service sector growth almost halted as cost
of living pressures sapped demand.
At 49.7, the manufacturing Purchasing Managers' Index came in at
a 26-month low compared to 49.8 in July. Nonetheless, the score was
above economists' forecast of 49.0.
The services PMI fell to a 17-month low of 50.2 from 51.2 in the
previous month. The expected reading was 50.5.
New business was down in both the manufacturing and service
sectors. Strong inflationary pressures were again key to the
reduction in new orders, with both input costs and output prices
continuing to climb rapidly. The pace of input price inflation was
the softest in close to a year and output charge inflation was the
slowest in the year-to-date.
Confidence among firms remained relatively muted amid worries of
an economic downturn.
This muted confidence, alongside falling new orders and a lack
of pressure on capacity meant that firms moderated their hiring
activities. The rate of job creation eased for the third month in a
row to the softest since March 2021.
Among the biggest two economies, Germany logged the sharpest
decline in output since June 2020 as manufacturing output continued
its downward trend amid an accelerated contraction in services
activity.
The composite output index dropped further into sub-50
contraction territory in August, down from 48.1 in July to 47.6.
The expected score was 47.4.
The services PMI came in at an 18-month low of 48.2 versus 49.7
in July and economists' forecast of 49.0. Meanwhile, the factory
PMI unexpectedly rose to 49.8 from 49.3. The reading was seen at
48.2.
Elsewhere, activity in France decreased for the first time in a
year-and-a-half, reflective of a sharp drop in manufacturing output
and softer growth of services activity.
At 49.8, France's flash composite output index was down from
51.7 in July and signaled the first reduction in private sector
output levels across France since February 2021. The reading was
forecast to drop to 50.8.
The services PMI slid to a 16-month low of 51.0 from 53.2 in
July. The score was forecast to ease marginally to 53.0.
At the same time, the manufacturing PMI came in at 49.0, in line
with expectations. The score declined from 49.5 in July and hit the
lowest in 27 months. Outside of the 'big-two', output continued to
increase, albeit only marginally, the survey showed.
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