- Prior 49.8
The headline reading is a 38-month high while the output index moved up to 52.5 from 50.6 previously, marking a 41-month high. A first monthly rise in new orders for over three years is also helping to lift overall business activity as the euro area economy shows continued signs of resilience in August. HCOB notes that:
“The economic recovery in the manufacturing sector is broadening, as conditions are improving in six out of the eight
countries for which PMIs are recorded—compared to only four countries in the previous month. As a result, the
Manufacturing PMI for the eurozone has crossed the expansion threshold for the first time since mid-2022, mainly because
companies have ramped up production more rapidly.
“Incoming orders also offer hope for a sustainable recovery. After over three years of continuous declines, companies are
now seeing a slight increase. Domestic orders have risen and are offsetting the weakening demand from abroad. In fact, the
best remedy against U.S. tariffs may be to strengthen domestic demand, including within the EU internal market. The
potential is significant, as the International Monetary Fund estimates that the tariff equivalent of the many non-tariff trade
barriers in the EU stands at 44%. Companies may be hoping for progress here, as a certain optimism has taken hold. Many
expect to produce more in 12 months than they do today.
“The recovery is real but remains fragile. Inventory levels continue to decline, and the slightly accelerated drop in order
backlogs shows that companies are still suffering from uncertainty. Given U.S. tariff policies and geopolitical tensions, this is
hardly surprising. We see the fact that production is being ramped up and more orders are being registered in this
environment as a sign of resilience.”
This article was written by Justin Low at investinglive.com.