|Manufacturing - Level||52.3||52.4||52.2|
|Services - Level||54.1||54.3||53.8|
|Composite - Level||54.1||53.7|
Manufacturers in the Eurozone have been treading water in August. The Eurozone manufacturing purchasing managers' index for August remained flat at 52.4, matching the previous month, although this was slightly better than the 52.2 reading that had been expected, thanks to a stronger than expected performance from Germany. GDP growth in the Eurozone slowed to 0.3 percent in the second quarter of this year, and so far the signals over how countries in the common currency bloc are faring in the third quarter are mixed.
August flash composite PMI edged up to a reading of 54.1 from 53.9 in July for the 26 successive month. The pace of increase was one of the fastest seen over the past four years. Both the manufacturing and service sectors contributed, with rates of expansion accelerating for both. Companies in both sectors indicated that output had been raised in response to increased levels of incoming new work, including stronger growth of new export orders at manufacturers. The services PMI reading was 54.3, up from 54.0 in July. The manufacturing PMI was unchanged at 52.4.
By country, output growth accelerated in Germany, with the pace remaining above its second quarter average. Subsequently, job creation hit a 44-month peak. The performance of France remained subdued in comparison, but still positive overall with economic output rising for the seventh straight month. However, while the French service sector continued to expand, manufacturing production fell further. Job losses were also registered in France for the second month in a row. Output growth remained marked outside of the 'big-two' nations in August. Economic growth accelerated to its highest since July 2007, leading to further solid increases in staffing levels at manufacturers and service providers alike.
The Eurozone PMI is produced by Markit and is based on original survey data collected from a representative panel of around 5,000 companies based in the euro area manufacturing and service sectors. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The flash estimate is typically based on approximately 85 percent to 90 percent of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.