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Euro zone manufacturing surge relieves on trade war fears

Euro zone manufacturing surge relieves on trade war fears

Information is not investment advice

In August, euro zone manufacturing surge speeded down to an almost two-year minimum because optimism shrank in the face of soaring worries of an escalating global trade conflict, as a poll disclosed on Monday.

However, the given edition of the poll needs to be treated with great caution. The matter is that it just represents nearly 70% of the usual sample size because slumps of EU factories take a break over the summer months.

In August, the IHS Markit's final manufacturing Purchasing Managers' Index headed south to a 21-month minimum of 54.6 from July's reading of 55.1, staying intact from an initial outcome, and still above the 50 level, separating contraction from surge.

An output index feeding into a composite PMI and considered to be a good indicator of economic health managed to rally from 54.4 to 54.7.

In August, euro zone factories came up with another firm production jump, although prospects declined further because surge of new orders reached a two-year minimum and fears about the outlook intensified.

Forward-looking indicators, including optimism, employment as well as new orders all sank, telling that there would be minor if any pick-up in activity in September.

The future output index, gauging optimism, went down from 62.4 to 61.0, which is its second lowest value since late 2015.

Manufacturers are extremely concerned about an ascending global trade clash. American leader Donald Trump has told aides that he’s about to slap duties on $200 billion more in China’s products.

For the purpose of drumming up demand, EU factories ramped up prices at the weakest rate in a year. On Friday, it was reported that in the European Union inflation declined to 2% the previous month, backing the European Central Bank's assessment that a recent surge might be just temporary.



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