Flash July PMIs Round-Up: Contractions For All But UK, Signs of Easing Inflation (1/2)

France: all July flash PMIs weaker than forecasts. Weak demand on the back of high inflation and recessionary fears was the key driver.

• Manufacturing fell 1.8 points to 49.6 (1.4 below forecast), dipping into the contractionary territory for the first time since November 2020. Manufacturing output contracted to 44.0, a 26-month low.
• Services activity also slipped 1.8 points, falling to 52.1 and a 15-month low.
• Inflation: Some signs of further price easing was seen in input prices. Wage, energy and fuel price pressures remained acute.
• Employment: Despite slowing, job creation remained strong. Some initial signs of reduced production seeing workforces decline.
• Expectations: Output expectations remain in positive territory, improving from the May 19-month low. Services expectations remain better than manufacturing.

Germany: all flash PMIs below expectations, all falling into contractionary territory below the 50 breakeven mark.

• Both domestic and export demand fell. Uncertainty regarding the economic outlook against a backdrop of soaring inflation saw demand suffer as tighter budgets generated less new business.
• Manufacturing output slumped by 3.8 points as output fell the most since May 2020.
• Services saw a 2.2-point decline, as staff shortages and falling new business dragged. Sales declined for the second consecutive month.
• Inflation: Input costs and prices charged continue to rise but at a slower pace. Energy/commodities, a weaker euro and higher labour costs remain key upwards pressures.
• Employment: Employment growth steady.
• Expectations: Confidence lowest since May 2020, outlooks significantly negative. Expectations slipped into negative territory for the fist time since May 2020 Service sectors seeing a slowdown for the first time in two years.

Eurozone: all flash PMIs lower than forecasts, with the manufacturing and services indexes seeing contractions.

• Output and new orders fell for the first time since early 2021 lockdowns and services close to stalled in July as lower disposable real incomes saw consumer demand eroded. Manufacturing output saw the largest decline and the slowdown in Germany exerted considerable downwards pressure on the composite reading.
• Inflation: Selling and input costs edged down on the back of easing supply chain disruptions and weakening demand. Selling price inflation softened across services and manufacturing.
• Employment: Employment growth moderated for second consecutive month to a 15-month low.
• Expectations: Business expectations lowest since May 2020, remaining slightly positive.