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EMU: PMI Composite Final
| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.9 | 51.9 to 51.9 | 52.0 | 50.0 |
| Services Index | 51.6 | 51.6 to 51.6 | 51.7 | 49.4 |
Highlights
July’s PMI data suggest that the eurozone economy moved from stagnation into a cautiously broad-based recovery. The composite output index increased from 50.0 to an eight-month high of 52.0, while the services business activity index rose from 49.4 to 51.7. Services therefore joined manufacturing in expansion, strengthening the recovery’s sectoral foundation.
Growth was also geographically dispersed as Germany returned to expansion, Italy and Spain accelerated, and Spain recorded particularly strong performance. France remained the principal weakness. However, subdued export orders indicate that the recovery is being driven mainly by internal demand rather than external competitiveness.
Employment stabilisation and improved business confidence provide encouraging signals for future investment and household income. Nevertheless, the continued reduction of backlogs suggests that businesses retain spare capacity, making substantial recruitment uncertain. Cooling input-cost and selling-price inflation may support purchasing power and provide policymakers with greater flexibility, although output-price inflation remains historically elevated.
In summary, the eurozone has stepped onto firmer economic ground, but the recovery remains vulnerable to weak exports, geopolitical uncertainty and uneven national performance. These latest updates take the RPI to 26 and the RPI-P to 19, meaning that economic activities continue to outpace market expectations in the euro area.
Market Consensus Before Announcement
The forecast calls for no revision for the composite or services index from the flash at 51.9 and 51.6, respectively, for July. That would be up from 50.0 and 49.4 in June, respectively.
Definition
The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.
Description
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.