Eurozone manufacturing growth moderated in July, driven by contractions in France and Greece, as well as declines in growth in Italy and Spain. Final Markit Eurozone Manufacturing PMI came in slightly above its earlier flash estimate of 51.9, but edges lower from June’s six-month high of 52.8.
A softer positive contribution from new order growth was the main drag, incoming new business rose at a weaker pace than in June. Rate of job creation also ticked lower, but remained among the fastest registered over the past five years. Expansions in output and employment are clearly being driven to a large extent by surging growth in Germany, while growth has almost stalled in both Italy and Spain, and contractions are being seen in France and Greece.
The ECB kept interest rates unchanged in July but left the door open to more policy stimulus, highlighting uncertainty and abundant risks to the economic outlook. EUR showed muted reaction to PMI data, was largely unchanged on the day, trading at 1.1159 at 11:30 GMT.
"Although signalling an easing in the pace of expansion in July, the PMI points to steady manufacturing growth. The problem is that growth is looking increasingly lop-sided, which will worry policymakers and add to calls for further stimulus from the ECB," said Markit's chief economist Chris Williamson.
