Business activity in the eurozone expanded a little faster than originally estimated in July, with Markit’s final composite purchasing managers’ index for the area – which combines the services and manufacturing sectors – rising to a six-month high.
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Markit said: “The latest reading signalled the fastest overall decline in construction output since June 2009”. The sector’s medium-term outlook was hugely improved by a new Mercedes-Benz investment announced last Friday, and now we can have higher hopes for the short term, as well.
Bilkulonline.com, Mumbai, Aug 1: The country’s manufacturing sector saw a significant uptrend in July registering the highest reading since April this year, as both production and new orders rose, a key macro-economic data showed on Monday.
According to the index if the number on the data falls below 50, then that reveals that the sector is contracting, which could contribute towards a another recession, just after the United Kingdom has recovered from the previous slump, the worst in a generation.
Markit’s manufacturing PMI for the eurozone was a marginal beat on the flash reading, released on July 22, which showed a score of 51.9.
Activity in the United Kingdom service sector registered a contraction in July for the first time in more than three years, underlining concern over the health of the British economy as the sector makes up approximately 80% of gross domestic product, industry data showed on Wednesday.
However, manufacturers have continued to shed workers at a solid pace, with respondents to the survey used to compile the index saying they cut staff in July to save costs and raise productivity. The change in the index chimes together with the expectation that the manufacturing sector will pick up in the second half of the year after a weak start in 2016.
NIESR said it did not expect the coming slowdown to match that seen during the global financial crisis – Britain’s worst recession since at least the 1930s – and Markit said there is “substantial uncertainty about the extent of any downturn”.
Business confidence, about the year ahead, was also at its lowest ebb since February 2009.
Policymakers are widely expected to reduce rates from the current 0.5% to a new low of 0.25%.
But the rate of economic expansion halved in the second quarter as French growth ground to a halt.
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Executives at Ford and Peugeot have already warned that they are going to have to increase prices in the United Kingdom following the drop in value of the pound, with Ford’s CFO Bob Shanks reporting that the Brexit vote cost the company around $60 million in the second quarter of 2016.
