LONDON (Reuters) – Euro zone manufacturing remained depressed in August, a survey showed on Monday, as data suggested it may recover as demand fell sharply this year.
The final HCOB euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, stood at 45.8 in August, just ahead of the initial estimate of 45.6 but well below the 50 mark that separates expansion from contraction. .
The resulting benchmark index, which includes the composite PMI expected on Wednesday and seen as a positive indicator of economic health, rose to 45.8 from 45.6 in July, just ahead of the flash estimate of 45.7.
“Things are going down, and fast. The manufacturing sector is stuck, and business conditions are getting worse at the same strong pace for three straight months, pushing the recession to 26 months hard and counting,” said Cyrus de la Rubia. Hamburg Commercial Bank.
“New orders, both domestic and international, are down sharply, ending any short-term hopes of a rebound.”
An index that includes new orders fell to 43.3 from 44.1, the lowest since December. Overseas demand has also fallen sharply this year.
That drop came as manufacturers raised their prices for the first time in 16 months, led by firms in France, the Netherlands, Greece and Italy.
“This could create a problem for the ECB, which has been dealing with persistent inflation in services while relying on falling producer prices to keep inflation under control,” de la Rubia said.
However, inflation in the financial bloc as a whole fell to a three-year low of 2.2% in August, the first official data showed on Friday, strengthening the case for further easing of policy from the European Central Bank.
It will cut its investment rate twice this year, in September and December, according to more than 80% of economists in an August Reuters poll, fewer cuts than markets currently expect.
