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     LONDON (MNI) - A Gloomy Outlook: After making a disappointing start to Q3 -
with declines in both the manufacturing and services indices - the August PMIs
are not likely to provide any respite. The composite index is projected to edge
down by 0.3 points to 51.2, which would be the lowest reading since January.
Both the Sentix measure of investor sentiment and the Eurozone ZEW expectations
index - which the PMI survey has reasonably close associations with - fell
sharply in August. The survey period for the flash release usually runs between
the 12th of the month and the last working day before the release date.
     Manufacturing In Recession: The Manufacturing PMI has been below the 50
no-change threshold since February. The new orders component fell to its lowest
level since April 2013 in July. The overall sector index is forecast to register
its fourth consecutive decline in August.
     Services Are Holding Up: While service sector conditions remain much
healthier in comparison, last month's drop in the Services PMI left it in line
with its long-run average, suggesting that further growth in the sector will be
insufficient to compensate for the ongoing contraction in manufacturing.
     Big 4 Breakdown: France's manufacturing PMI was the last to fall below the
50-no-change threshold in July, while Germany's PMI remains the weakest among
the Big 4, due to the country's greater external exposure. Both flash PMIs are
expected to fall by 0.2 points in August, indicating a continued industrial
recession. Spain & Italy (for which flash data is not published) saw marginal
gains in their July manufacturing PMIs, although the indices remain in
contraction territory, in contrast to their services counterparts.
     Plenty of Risk-Factors: Unresolved global uncertainties - including trade
tensions, mounting fears of a no-deal Brexit, possible auto tariffs and Italy's
political situation - continue to weigh on economic activity and sentiment.
Looking ahead, any significant turnaround in the Eurozone economy (which grew by
just 0.2% q/q in Q2) appears to be some way off, increasing the urgency for
further policy stimulus from the ECB.
--MNI London Bureau; +44 0203 865 3814; email: