MNI DATA PREVIEW: EZ PMIs To See Soft Start To Q3

     LONDON (MNI) - Cautious Consensus: For the second month running, markets

are projecting no change in the EZ's Composite PMI (expected to hold steady in

July at 52.2). With so much uncertainty still clouding the outlook and no

decisive progress on various key geopolitical issues, markets - and the economy

- appear to have no clear sense of direction.

     Manufacturing Malaise: While the Manufacturing PMI is forecast to edge up

0.1pt, this would still leave it stuck in contraction territory, where it has

languished for five months running.

     Still-Strong Services: In contrast, while the Services PMI is expected to

lose some steam (-0.3pt to 53.3), it is nonetheless set to signal continued

strong growth. Indeed, while there have been some signs of infection from

externally-led manufacturing to domestically-focused services (see MNI Data

Analysis: Mind The Gap: EZ Services Resilience Being Tested As Industry Downturn

Persists) and local labour markets (see MNI Data Analysis: The EZ Labour Market:

What Lies Beneath?), domestic fundamentals remain robust.

     Big 4 Breakdown: Unsurprisingly, given its greater external exposure,

Germany's Manufacturing PMI is the weakest of the Big 4 (while its services

index remains strongest). The 0.2pt pick-up to 45.2 anticipated for July would

still leave it consistent with industrial recession. France is the outperformer,

with both PMIs in expansion. Spain & Italy (for which flash data is not

published), registered Manufacturing PMIs sub-50 in June, while their Services

PMIs remained in expansion.

     Unresolved Uncertainties: Despite some encouraging recent developments, the

geopolitical backdrop has not improved decisively - and this remains key for a

sustained turnaround in EZ activity. While the G20 US-China trade truce averted

a further escalation, the chances of reaching a lasting agreement have not

necessarily increased. Meanwhile, lingering concerns over the possible

imposition of US auto tariffs and a hard Brexit continue to weigh on sentiment

and activity.

--MNI London Bureau; +44 0203 865 3814; email: irene.prihoda@marketnews.com

[TOPICS: MAXPR$,M$X$$$]