Weak EU PMI Readings Highlight Difficulties Ahead

Weak EU PMI Readings Highlight Difficulties Ahead

Friday 21st August 2020 – 09:37 (BST)

European manufacturing and service sector output moved back to contractionary territory following worse than expected preliminary readings for August. The latest figures released by Market Economics showed EU manufacturing PMI at 51.7 vs the 52.9 consensus, whilst EU services PMI just tipped 50.1 vs the 54.5 consensus.

Companies across Europe had reported an encouraging start to Q3 last month, whilst a pickup in manufacturing output in both Germany and France helped stimulate overall output. The sharp decline in the service sector comes amid renewed travel restrictions across the EU and a sustained decline in overall employment that continues to undermine domestic demand.

Elsewhere, minutes released from Julys meeting of policymakers at the European Central Bank indicated a slightly more optimistic economic outlook for 2020 and beyond. They also reiterated all of the banks stimulus measures would be needed to support growth and inflation across Europe, but fell short of committing additional funds to the existing €1.35 trillion Pandemic Emergency Purchase Programme (PEPP).