The latest data onEuropean industry they seem to get closer the specter of recession. The index Eurozone manufacturing PMI for July it dropped to a 25-month low, 49,8 points, from 52,1 in June. It is slightly above the preliminary estimate (49,6), but is still below 50, which marks the boundary between expansion and recession.
“The manufacturing sector in the Eurozone is sinking into an ever steeper decline – the comment of Chris Williamson, chief economist of S&P Global – New orders are falling at a pace that, excluding months of pandemic lockdown, is the strongest since the debt crisis in 2012. Output is falling in all countries except the Netherlands. The lower-than-expected sales are reflected in orders and exports and have led to the largest increase in inventories ever recorded by the survey. The only positive aspect is the contribution of weak demand to the reduction of pressure on prices, even if the cost of energy continues to worry about the possible limitation of gas supplies in the coming months”.
Italy: PMI manufacturing index drops to 48,5 in July
Italy went even worse, whose manufacturing PMI index stopped last month at 48,5 points, from 50,9 in June. It's about the lowest level since June 2020.
“The Italian manufacturing sector faced further challenges in July, with a renewed decline in production and new orders – says Lewis Cooper, economist at S&P Global Market Intelligence – The weaker performance has seen companies reduce purchases to slightly mitigate the supply problems, but inventories of finished products increased significantly. The easing of inflationary pressures was positive. The level of business confidence was particularly weak”.
Germany: PMI manufacturing index falls to 49,3
The manufacturing PMI also falls into the contraction zone Germany, which fell to 49,3 points in July, from 52 in June. As for Italy, it is the figure lowest since June 2020, but the German survey is still better than expected (49,2 the preliminary).
“The decline in the index is not a surprise, given that there have been warning signs for several months – explains Phil Smith, associate director of S&P Global Market Intelligence – New orders have been in sub-50 territory since April and the trend continues downward trend, as demand continues to drift away from last year's highs, challenged by the uncertain outlook and high inflation environment. Another sharp increase in inventories in July prompts producers to reduce buying activity for the first time in two years. The potential shortage of gas supplies seriously worries producers for next year; therefore, expectations have turned negative since March and are getting worse every month.”
France: PMI manufacturing index at 49,5
On the same line also the France, which in July saw the manufacturing PMI drop to 49,5 from 51,4 in June. The figure is the lowest for two years and is slightly below the preliminary estimate of 49,6.
“The French manufacturing sector is in a downturn – underlines Joe Hayes, senior economist at S&P Global Market – Production and new orders have both decreased at the highest rates since the initial wave of Covid due to inflation. The latest drop in output was the sharpest in more than nine years. Companies have reduced their purchasing activity and, in some cases, their workforce. Business confidence remained at a low level, reflecting producers' concerns about the outlook for inflation, supply chains and the war in Ukraine.
