Manufacturing activity in Europe’s industrial heartland continued to weaken in July, highlighting once again the continent’s difficult position in the ‘deindustrialisation’ debate.
The eurozone manufacturing purchasing managers’ index (PMI), a real-time indicator of activity in the sector, fell this month and the sector continued to contract in both Germany and France, S&P Global said today.
The eurozone manufacturing PMI index fell to a seven-month low of 45.6 from 45.8, confounding expectations for a modest rise to 46.0. In Germany, the indicator fell to a three-month low of 42.6, while in France it dropped for the second consecutive month to 44.1. Any reading below 50 indicates contraction.
The composite PMI, which includes the services sector, remained slightly above 50 despite a slowdown compared with June.
The Eurostat industrial production index for the eurozone remains below the level of 2021 and is on a downward trend.
In a commentary accompanying the data, Cyrus de la Rubia, chief economist at Handelsbank in Hamburg, told Politico: ‘This looks like a serious problem. The German economy has slipped back into contraction territory, driven by a sharp and dramatic fall in manufacturing output. Any hope that this sector might benefit from a better global economic climate is fading”.
Former European Central Bank (ECB) president Mario Draghi’s long-awaited report, due in September, is expected to provide more detail and help set the economic agenda for Brussels in the coming years.
In a recent speech in Spain, Draghi stressed the importance of cheaper energy as a driver of economic growth, while also pointing to a wider scope for state-led investment and trade protection measures.
