Germany July final manufacturing PMI 49.1 vs 49.2 prelim

• Prior was 49.0

Key findings:

• Pace of job losses eases to weakest in almost two years.

Comment:

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

“The recovery in the manufacturing sector remains sluggish. Although the headline index has been rising almost continuously since the beginning of the year, the expansion threshold has still not been reached. Among other things, the continued and rapid reduction in inventories signals that companies have not yet switched to a sustained recovery mode and prefer to remain cautious. This is also reflected in the fact that optimism has recently weakened somewhat again.

“The recovery in demand has recently been driven primarily by foreign markets. Export orders have increased for four consecutive months. While this was initially linked to front-loaded U.S. imports in the spring, the continued foreign demand into early summer suggests a more fundamental improvement in conditions. The tariff agreement reached at the end of July between the EU and the U.S. may mean that U.S. importers will buy fewer goods from Germany in the near future. At the same time, however, uncertainty is likely to settle at a lower level, which should support overall demand.

"The clearest indicator of a recovery is the production index, which has shown an expansion in output for five months now. However, the rate of growth has recently slowed significantly, mainly due to the consumer goods industry, while production in the capital goods sector has grown robustly. This suggests that domestic demand, which depends on private consumption, is somewhat weakening, while foreign demand – crucial for the capital goods industry – is performing better."