Day: July 24, 2024

France’s private sector output moved closer to stabilization in July as the Olympic Games fueled economic activity, flash survey data compiled by S&P Global showed on Wednesday.

The HCOB composite output index posted 49.5 in July, up from 48.2 in June. The score was expected to climb moderately to 48.9.

A score above the threshold 50.0 indicates expansion, while a below 50 reading suggests contraction.

“The French economy seems on track for a recovery in the second half of the year, a recovery led by the service sector, but both input and output prices remain a challenge for the French economy as inflation rates accelerated,” Hamburg Commercial Bank economist Norman Liebke, said.

The French economy is projected to grow 0.3 percent in the third quarter, said Liebke.

The flash manufacturing Purchasing Managers’ Index dropped to 44.4 from 45.3 in June. The score was forecast to rise to 45.8.

On the other hand, the services PMI rose to a three-month high of 50.7 from 48.8 in the previous month. The expected reading was 49.7.

A sharper contraction in factory production was offset by a renewed expansion in activity at services firms. The manufacturing sector contracted for a twenty-sixth straight month and also marked the biggest fall since January.

By contrast, business activity at services companies increased for the first time since April, underpinned by Olympic Games. The end of the election period also boosted output.

The volume of new business logged a decline in July. The decline was primarily factory-led as manufacturers posted a steeper fall and demand for services dropped only marginally.

Backlogs of work depleted again in July, particularly in the goods-producing sector. Nevertheless, employment increased for the sixth straight month. But hiring was restricted to the service sector.

The survey signaled a further weakening of business confidence. Although firms remained optimistic of higher activity, the degree of positivity fell for a fourth straight month to a year-to-date low.

Finally, survey showed a marked intensification of cost pressures. Operating expenses was the fastest since last November. In turn, selling charges grew at the fastest pace in three months.

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Germany’s private sector slipped into contraction in July due to the deeper decline in manufacturing and slower growth of services activity, flash survey results from S&P Global showed on Wednesday.

The HCOB composite output index dropped unexpectedly to 48.7 in July from 50.4 in June. The reading was seen at 50.7.

“This looks like a serious problem,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said. “Germany’s economy fell back into contraction territory, dragged down by a steep and dramatic fall in manufacturing output,” de la Rubia added.

The hope that manufacturing sector could benefit from a better global economic climate is vanishing into thin air, said de la Rubia. The economist said the German economy will shrink 0.4 percent in the third quarter.

“While it is still early days and many data points are yet to come, the second half of the year is starting on a very weak note,” the economist added.

The services Purchasing Managers’ Index registered a four-month low score of 52.0 in July, while it was expected to remain unchanged at 53.1.

The manufacturing PMI plunged unexpectedly to 42.6 from 43.5 a month ago. The expected score was 44.0.

Total inflows of new business fell across the private sector, owing to the weakness in manufacturing new orders. On the other hand, service sector new business rose for the fourth month in a row, albeit at a slower pace amid a renewed fall in demand from non-domestic customers.

Backlogs of work fell across both sectors in July. Outstanding business decreased the most since February.

At the composite level, employment reported the steepest fall since August 2020 as workforce numbers in the manufacturing sector posted the steepest drop since March. Services firms also reduced staffing levels.

Turning to prices, the survey showed a moderate uptick in input cost inflation. Input cost inflation remained below its long-run average.

Average prices charged by businesses grew at a slower pace. The rate of inflation weakened since June due to the slowest rise in service sector output prices for more than three years. The rate of decrease in factory gate charges was the weakest since January.

There was a marginal improvement in business expectations in July, underpinned by a rebound in services confidence, with manufacturing growth expectations moderating to a four-month low.

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The euro area private sector recovery waned further in July amid deteriorating manufacturing sector performance and softening services activity growth, a survey compiled by S&P Global showed on Wednesday.

The HCOB composite output index dropped unexpectedly to 50.1 in July from 50.9 in June. The score was seen at 51.1. A score above 50.0 indicates expansion.

The manufacturing was the key source of weakness, while an increase in services activity stopped the private sector from falling into contraction.

The services Purchasing Managers’ Index posted 51.9 in July, down from 52.8 a month ago. The score was forecast to climb to 52.9.

At 45.6, the manufacturing PMI slid to a seven-month low from 45.8 seen in June and also below economists’ forecast of 46.1.

New orders dropped for the second straight month in manufacturing, while new business in services grew moderately. However, the growth in services was insufficient to offset the steepest fall in manufacturing orders since December.

New export orders fell for the twenty-ninth consecutive month as firms in the euro area continued to struggle to gain sales from international clients.

Sentiment among companies slid to a six-month low and came in below the series average with confidence waning in both manufacturing and services sectors.

Ending a six-month sequence of job creation, employment was unchanged in July. While service providers raised staffing levels, manufacturing workforce numbers decreased to the largest extent in 2024 so far.

Manufacturers reduced their purchasing activity and lowered inventories of both purchases and finished goods. Meanwhile, suppliers’ delivery times shortened for the sixth consecutive month.

On the price front, the survey showed that input prices grew sharply in July to hit a three-month high. Price pressures were more pronounced in the service sector. That said, manufacturing cost inflation also picked up to the fastest rate in a year-and-a-half.

Meanwhile, output price inflation softened as falling demand limited pricing power. Charges increased at the slowest pace since last October.

“Our conclusion is that while a September rate cut will most probably be exercised, it will be much trickier to follow this path in the months thereafter, unless the downturn morphs into a deep recession,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

Among big-two economies, output in Germany decreased for the first time in four months, while France posted a third consecutive monthly reduction in business activity.

Germany’s private sector slipped into contraction in July due to the deeper decline in manufacturing and slower growth of services activity. The HCOB composite output index dropped unexpectedly to 48.7 from 50.4 in June.

The services PMI registered a four-month low score of 52.0 in July, while it was expected to remain unchanged at 53.1. The manufacturing PMI plunged unexpectedly to 42.6 from 43.5 a month ago. The consensus was 44.0.

France’s private sector output moved closer to stabilization in July as the Olympic Games fueled economic activity. The HCOB composite output index posted 49.5 in July, up from 48.2 in June.

The flash factory PMI eased to 44.4 from 45.3 in June. The score was forecast to rise to 45.8. On the other hand, the services PMI rose to a three-month high of 50.7 from 48.8 in the previous month. The expected reading was 49.7.

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