Bankinter : Preliminary July PMIs disappoint as they fall more sharply than expected. – (i) Manufacturing PMI 42.4 vs 43.5 expected and 43.4 previous. (ii) Services PMI 51.1 vs 51.6 expected and 52.0 previous. (iii) Composite PMI 48.9 vs 49.6 expected and 49.9 previous. By countries: FRANCE. – (i) Manufacturing PMI 44.5 vs 46.0 expected and 46.0 previous. (ii) Services PMI 47.4 vs 48.5 expected and 48.0 previous. (iii) Composite PMI 46.6 vs 47.7 expected and 47.2 previous. GERMANY. – (i) Manufacturing PMI 38.8 vs 41.0 expected and 40.6 previous. (ii) Services PMI 52.0 vs 53.1 expected and 54.1 previous. (iii) Composite PMI 48.3 vs 49.8 expected and 50.6 previous.
Assessment: Preliminary data are weaker than expected, especially manufacturing, which continues to be weaker than foreseen. Economic activity continues to cool and is expected to continue in the coming months as services lose steam. They highlight the increased probability that the German economy will enter recession in the second half of the year. On the positive side, prices paid are falling back to the lows of late 2020 and early 2021 (benefiting from falling commodity costs).