Europe Manufacturing Growth Slows as Germany, Italy Ease
Europe Manufacturing Growth Slows as Orders Weaken
Michele Tantussi/Bloomberg
Germany’s manufacturing index slipped to 58.2 in August from 61.2 in July.
Germany’s manufacturing index slipped to 58.2 in August from 61.2 in July. Photographer: Michele Tantussi/Bloomberg
ECB council member Axel Weber
Hannelore Foerster/Bloomberg
ECB council member Axel Weber has also signaled confidence in the outlook, saying that while the euro region won’t show “as high growth as before” over the coming months, the recovery remains “on track.”
ECB council member Axel Weber has also signaled confidence in the outlook, saying that while the euro region won’t show “as high growth as before” over the coming months, the recovery remains “on track.” Photographer: Hannelore Foerster/Bloomberg
Europe Manufacturing Growth Slows as Germany, Italy Ease
Jock Fistick/Bloomberg
Employees work on the assembly line producing the new Audi A1.
Employees work on the assembly line producing the new Audi A1. Photographer: Jock Fistick/Bloomberg
Growth in Europe’s manufacturing industry slowed in August and export demand fell to the lowest in seven months, adding to signs the economy is cooling after the second-quarter surge.
A gauge of manufacturing in the 16-nation euro region declined to 55.1 from 56.7 in the previous month, London-based Markit Economics said today. That’s above an initial estimate of 55 released on Aug. 23. It’s the 11th straight month with a reading above 50, indicating expansion.
While Europe’s economy grew at the fastest pace in four years in the second quarter, companies have been largely reliant on export demand to boost sales. Stocks in Europe and the U.S. have dropped in the past two weeks on concern the global recovery is losing steam. In the U.K., manufacturing growth slowed to the weakest in nine months in August, while a gauge of U.S. factory activity probably also declined.
The recovery is “likely to remain bumpy and relatively gradual,” said Howard Archer, chief European and U.K. economist at Global Insight IHS in London. “While still pointing to decent manufacturing growth, the softer survey reinforces suspicion that euro-zone manufacturers will find it increasingly difficult to sustain their impressive performance.”
The euro rose against the dollar after the report and was at $1.2797 as of 10:35 a.m. in London, up 0.9 percent on the day.
Orders Weaken
A measure of manufacturers’ new orders fell to the lowest this year and a gauge of export orders declined for a fifth month, Markit said. Employment increased for a fourth month, led by Germany, the Netherlands and Austria.
Germany’s manufacturing index slipped to 58.2 in August from 61.2 in July, matching an initial estimate, while the gauge for France rose to 55.1, higher than estimated. Italy’s measure fell to 52.8, lower than economists had forecast.
A composite index based on a survey of euro-area purchasing managers in both services and manufacturing probably fell to 56.1 in August from 56.7, while an index of euro-area services probably slipped to 55.6 from 55.8. Markit is scheduled to release final figures for those indicators on Sept. 3.
China Growth
In the U.S., the world’s biggest economy, the Institute for Supply Management’s factory index probably declined to 52.7 in August, the lowest since September 2009, according to the median estimate of 78 economists surveyed by Bloomberg News. The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time.
A Chinese purchasing managers’ index released today by HSBC Holdings Plc and Markit rose to 51.9 in August from 49.4. A separate, government-backed PMI increased to 51.7 from 51.2, the Federation of Logistics and Purchasing reported.
The European Central Bank will publish new economic forecasts tomorrow for this year and 2011. In June, the Frankfurt-based central bank projected the euro-region economy to expand around 1 percent and 1.2 percent, respectively.
The euro’s 11 percent slide against the dollar this year may help shield exporters from a global slowdown by making their goods more competitive. Volkswagen AG’s Audi luxury brand will start selling the new A1 compact car outside Europe next year and is increasing production to meet higher demand, sales chief Peter Schwarzenbauer said on Aug. 24.
ECB council member Axel Weber has also signaled confidence in the outlook, saying on Aug. 27 that while the euro region won’t show “as high growth as before” over the coming months, the recovery remains “on track.”
“We are bordering on a self-sustaining recovery in Europe,” said Weber, who also heads Germany’s Bundesbank. “There is not much concern about a renewed recession.”
To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net
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