Eurozone manufacturing activity still subdued in July

By Tuba Sahin

ANKARA (AA) - The performance of the eurozone (EA19) manufacturing sector remained subdued in July, said an IHS Markit report on Wednesday.

The Eurozone Purchasing Managers’ Index (PMI) for the manufacturing sector stood at 55.1 in July, slightly up from June’s 18-month low of 54.9 and over five points below the record high seen at the end of 2017, according to London-based global data company IHS Markit.

The Netherlands, Germany, and Austria remained the strongest-performing nations among member countries, although the reading eased to a 14-month low in the Netherlands.

The report said manufacturing output also posted a mild improvement in the month.

"The more subdued trend in output growth in recent months reflects a concurrent slowdown in the pace of increase in new orders," it said.

New work inflows were adversely affected by the weakening trend in the pace of increase in new
export orders, amid uncertainty about the economic outlook and worries about tariffs and trade wars, it said.

New export business rose at the slowest pace since August 2016.

Chris Williamson, chief business economist at IHS Markit, said the reading was the second-weakest number in more than a year-and-a-half.

"The past two months have seen the most subdued spell of factory output growth since late 2016. Worse may be to come," Williamson said.

Williamson said manufacturers may have to adjust production down in coming months unless demand recovers.

"The survey responses indicate that the slowdown likely reflects worries about trade wars, tariffs, and rising prices, as well as general uncertainty about the economic outlook," he said.

"Optimism about the future remained at one of the lowest levels seen over the past two years."

The PMI for the manufacturing sector is seen as an important gauge in tracking the health of the sector, with values below 50 points showing contraction while above indicates expansion.