Financial News: Eurozone Manufacturing Activity Strengthens

Eurozone Manufacturing Activity Strengthens

(RTTNews) - The euro area manufacturing activity strengthened in July as production posted its biggest expansion in nearly four-and-a-half years, final data from S&P Global showed Monday.

The Purchasing Managers' Index edged up to 51.9 in July from 51.4 in June, signaling the strongest improvement in factory operating conditions since April. However, the score was slightly below the flash estimate of 52.0.

"Eurozone factories are enjoying something of a summer growth spurt, with production rising at its fastest rate for four and a half years," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

"However, there are signs that this good news may prove short-lived, with momentum at risk of fading as autumn approaches," Williamson added.

Production grew the most in nearly four-and-a-half years in July. Meanwhile, new orders grew only slightly as firms used backlog completions as a means to drive output volumes higher.

Factory employment declined further and purchasing volumes were reduced for the second straight month. Manufacturers reduced their pre- and post-production stock levels.

The rate of inflation eased to a five-month low in July. The degree to which factory gate prices were raised subsequently eased and hit the softest since March.

Confidence among manufacturers rose to its highest level since February. Nonetheless, sentiment remained subdued. The survey showed highly divergent trends among euro area's four largest economies. Germany was the best performer, with growth hitting joint-strongest in more than four years. Italy remained in the expansion zone but growth slowed to a four-month low. Meanwhile, Spain and France's manufacturing sectors were broadly stagnant.

Germany's manufacturing activity improved in July as output growth accelerated on the back of an upturn in export sales. The final factory PMI rose to 52.2 in July, in line with estimate, from 50.3 in the previous month.

France's manufacturing sector slipped into the contraction territory in July with accelerated declines in new orders, production and purchasing activity. The final manufacturing PMI posted 49.8 in July compared to 51.2 in the prior month. The flash reading was 50.0.

Italy's manufacturing growth softened in July as the fall in new orders led to softer output growth and a renewed dip in jobs. The factory PMI fell to 51.3 in July from 52.2 in the previous month.

Spain's manufacturing activity registered a marginal growth in July. The PMI rose to 50.2 from 49.7 in the previous month.

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