Today’s Eurozone Data Shows That Economic Weakness Still Remains Europe
The strong bounce in German and Eurozone economies is over now
The Eurozone economy posted a strong bounce in May and June, after the reopening of the continent, but it seems like the V-shape recovery won’t happen, as the Eurozone economy is showing signs of weakness now. Earlier today we saw the CPI inflation which turned negative this month, while French and Italian manufacturing sectors remain in contraction. The German data is showing that the economy is not as bad as in the south of Europe, but it’s not keeping the previous pace. So, everything is slowing down again now.
Germany August Final Manufacturing
- August final manufacturing PMI 52.2 vs 53.0 prelim
- July manufacturing stood at 51.0 points
German GDP Forecast
- 2020 GDP forecast to be revised to -5.8%; previously -6.3%
- 2021 GDP forecast to be revised to +4.4%; previously +5.2%
German Employment Report – 1 September 2020
- August unemployment change -9.0k vs -2.0k expected
- July unemployment change was -18.0k; revised to -17.0k
- Unemployment rate 6.4% vs 6.4% expected
- Prior unemployment rate at 6.4%
“The manufacturing sector continues to make up the ground lost during the lockdown, with the survey data for August showing output growth reaching the fastest since early-2018. There has been a sustained strong rebound in new orders, although it’s unclear where the true current level of demand is really at, with some firms still noting a catch-up effect due to orders having previously been delayed during the lockdown.
“The encouraging top-line numbers mask ongoing troubles in some sectors, especially machinery and equipment production, which is being hit by a lack of appetite for investment.
“Factory jobs continued to be lost at an unsettling rate in August, which is bad news for domestic demand. However, with backlogs of work at factories on the rise, we’re at least seeing the pace of staff cuts slowing down.
“By contrast, the decline in inventory levels has accelerated, with some firms under financial pressure to streamline stocks and many still showing caution in terms of their purchasing activity.”
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