Eurozone companies´ optimism at minimal levels

Eurozone GDP growth in Q1 reached +0.4% on a quarterly basis vs a consensus of 0.6%

BS Markets | The growth of the Eurozone economy continued in August, although “at a slower rhythm tan in the last 18 months”. Moreover, companies´expectations of future growth have fallen to the lowest level in almost two years, according to the data of the PMI study by consultant Markit.

In particular, the composite PMI index  increased from the 54.3 registered in July to 54.4 in August. This rise reflects a small acceleration in the growth of total activity in the month, however, this increase is the third lowest since January 2017, putting it signficantly below the increases observed at the beginning of the year.

The rhytms of growth in the manufacturing and services sector show a slight improvement, although both are among the lowest in the last 18 months.

For its part, the increase in new orders has recovered slightly in both sectors, even if overall it is the third lowest level since since December 2016. The result has been especially weak in the manufacturing sector, where it has registered the lowest increase in new orders for exports in the last two years.

As for employment, the growth has reached its highest level in the last six months, closing in on the highest levels recorded by the study. Nevertheless, even though the growth in people employed in the services sector reached the highest level since October 2007, that in manfacturing registered its lowest level in the last 18 months.

The optimism of future business activity has been reduced by recent signs of moderating demand, higher prices and growing political concerns. Thus, expectations have seen themselves reduced to the lowest level in the last 23 months.

The PMI index for August also shows the existence of a greater pressure on prices, driven by salary increases in some countries, together with an increase in the prices of oil, transport and raw materials. Nevertheless, even if the rhythm of inflation in costs and sale prices has remained among the highest levels in the last seven years, both show their lowest levels in the last three months.