French Factory Drag Intensifies as Germany Leads Europe RecoveryScott Hamilton
France’s manufacturing industry shrank more than initially estimated last month, leaving Germany to take a greater share of the burden of driving the euro-area recovery.
Markit Economics said its Purchasing Managers’ Index for France fell to 48.3 from 49.6 in July, lower than the 48.6 reading reported on Aug. 21. In contrast, the German gauge rose more than estimated and was well above the 50 level that divides expansion and contraction. The measure for the euro zone also signalled growth.
The report comes days before European Central Bank policy makers meet in Frankfurt, where they’ll have to grapple with the impact of China’s economic slowdown and downside risks to inflation. The Markit report showed that input costs at euro-region factories fell for the first time in six months and selling prices barely grew.
Markit economist Rob Dobson said manufacturing in the 19-nation currency bloc “showed continued resilience” in August, though he noted that Germany is “taking on more of the growth strain.”
“The PMI is tracking at somewhere close to a 2 percent annualized increase in industrial production so far in the third quarter,” he said. “A modest gain but still representing a positive step forward.”
The overall euro-area measure was at 52.3 in August, below the initial reading of 52.4. In a positive sign, the gauge of new orders rose to the highest in more than a year, while export demand also improved.
“We will have to wait and see if recent concerns regarding a slowdown in China filter through to the figures in coming months,” Dobson said.
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