Eurozone July final manufacturing PMI 49.8 vs 49.8 prelim

• Prior 49.5

Key Findings:

• Production volumes tick up despite marginal decrease in new orders.

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“Manufacturing in the eurozone is cautiously regaining momentum. It is primarily the smaller economies that offer reasons for optimism. The PMIs from Spain and the Netherlands indicate accelerated economic growth, while Ireland and Greece remain in expansion territory. In the three largest economies as well as Austria, the PMI signals that the industrial recession has significantly eased. This broadens the scope of the recovery. With the newly agreed trade framework between the EU and the U.S., uncertainty should decline, and the signs point to a continued upward trend in the coming months.

“France is currently the biggest drag on growth in the eurozone’s manufacturing sector. It is particularly discouraging that production in France has declined over the past two months, while employment has slightly increased during the same period. The problem lies in the resulting drop in productivity, which makes economic growth even harder to achieve.

"In Germany, the situation is reversed: production is growing while employment is being reduced. France is also burdened by the prospect of an austerity budget and the associated risk of the current government stepping down. This contrasts with Germany, where much of the growth hopes rest on expansionary fiscal policy and the political situation is significantly more stable than in France. Less political and fiscal uncertainty in the eurozone’s second-largest economy would be important to help the eurozone manufacturing sector achieve sustainable growth overall.

“Supply chains remain relatively strained. Delivery times have lengthened. Given the fragility of the recovery, it is not demand that is causing customers to wait longer for their goods. Volatile U.S. tariff policies and uncertainty stemming from geopolitical tensions may play a key role here. We expect that companies will continue to face sudden supply chain disruptions for the foreseeable future.”