Eurozone output expanded for the fourteenth successive month in August, according to the latest PMI surveys from Markit. At 52.5 in August, the final Markit Eurozone PMI® Composite Output Index eased from July’s three-month high of 53.8 to signal the weakest rate of increase during the year-so-far.
Output growth slowed in both the manufacturing and service sectors. Manufacturing production increased at the slowest pace during the current 14-month
sequence of expansion, while the rate of growth at service providers was the weakest since June. The stronger expansion was again recorded in services.
Ireland remained at the top of the eurozone PMI output growth league table in August. Business activity in Ireland rose at the quickest pace since August 2000, underpinned by a similarly strong increase in new orders (the fastest since July 2000).
Spain also registered accelerated output growth – an 89-month high – with the performance of the service sector especially positive. Although Germany saw economic activity expand for the sixteenth month running, growth slowed at both manufacturers and service providers. Italy dipped back into contraction territory in August, halting a seven-month sequence of expansion. The weakness in Italy was mainly centred on services, where business activity and new orders both fell,
while manufacturing saw a sharp growth slowdown.
French output contracted for the fourth month running. However, the pace of decline was only mild and, in a positive sign, inflows of new business rose following a moderate increase in the service sector. French manufacturing output and new business remained in deep downturns, however.
Job creation slowed to near-stagnation in August. However, the latest survey nonetheless marked the ninth successive month without a decrease in headcounts. Ireland was a bright spot on the labour market horizon, with jobs growth at a 14-year high. Germany and Spain reported increases to payroll numbers, but cuts were seen in France and Italy.
Input cost inflation slowed to a three-month low in August, with rates of increase easing in Germany, Italy, Spain and Ireland. Meanwhile, average selling prices continued to fall, with only Germany and Ireland reporting increases in output charges.
Eurozone service sector business activity rose for the thirteenth successive month in August. The Eurozone Services Business Activity Index posted 53.1, down slightly from July’s 38-month high of 54.2 and below the flash estimate of 53.5.
Output increased in four out of the five nations covered by the services survey. The sole exception was Italy, where business activity dipped back into contraction for the first time since March. Faster rates of output expansion were seen in Ireland (two-month high) and Spain (92-month record). Growth slowed in Germany, but was solid overall, and remained marginal in France.
Inflows of new business also rose for the thirteenth consecutive month in August. The rate of expansion was unchanged from the prior month, albeit less marked than that signalled by the earlier flash estimate.
Growth of new business was strongest in Ireland and Spain – despite easing in both nations – while the pace of increase in Germany accelerated and new orders returned to expansion in France. Italy saw a slight reduction in new business.
Business confidence dipped to its lowest in 12 months during August, with the degree of positive sentiment lessening in all five of the nations covered. This mainly reflected rising geopolitical and market uncertainties.
Employment rose for the fifth straight month in August. However, the pace of job creation was only marginal and the weakest during this sequence. Further cuts to headcounts were initiated in France and Italy, while jobs growth slowed in Germany and Spain. In contrast, employment in Irish services continued to rise at one of the most elevated rates in the survey history.
Average input cost inflation in the eurozone service sector slowed to a four-month low during August. Average charges, meanwhile, declined for the thirty-third month running, as strong competition and market uncertainty led to further selling price reductions. The rate of decrease was the sharpest since May.