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Eurozone Manufacturing Sector Logs Moderate Growth In August

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The euro area manufacturing sector expanded at a moderate pace, as initially estimated, in August despite the severe constraints on economic activity related to fighting the global coronavirus disease, final survey data from IHS Markit showed on Tuesday.

The manufacturing Purchasing Managers' Index fell slightly to 51.7 in August from 51.8 in July. The reading matched the flash estimate.

Manufacturing output growth reached its highest level for over two years. At the same time, new orders increased for the second month but eased slightly on July's near two-and-a-half-year peak.

On the price front, the survey showed that input costs faced by manufacturers were little changed since July, while competitive pressures led to a fourteenth successive monthly fall in output charges in August.

Finally, confidence about the future continued to pick up during August, reaching its highest level for over two years as firms looked forward to the ongoing recovery from the impacts of the pandemic on economic activity.

Country level data indicated some divergent trends in manufacturing performance. Italy led the way in terms of growth, registering its best improvement for over two years. In Germany, growth hit a 22-month peak.

In contrast, manufacturing performance stagnated in Spain and France.

With growth in both factory production and total new orders rising at the sharpest rate since February 2018, Italy's manufacturing sector grew the most in more than two years in August.

Italy's factory PMI advanced to 53.1 from 51.9 in July. Economists had forecast the score to rise to 52.0.

Germany's manufacturing sector has expanded in each month since hitting an 11-year low at the height of the covid-19 lockdown in April. The final IHS Markit/BME manufacturing PMI came in at 52.2, up from 51.0 in July. But score was below the flash 53.0.

France's manufacturing conditions deteriorated in August due to the slower growth in production and marked reduction in staff numbers. The final factory PMI declined to 49.8 from 52.4 in July. The flash score was 49.0.

Having returned to growth in July, the recovery in the Spanish manufacturing sector stalled in August. At 49.9, the PMI fell from 53.5 in July. The score was expected to drop moderately to 52.8.

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