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Germany, France, the Eurozone – PMI in August 2021. Comments

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The PMI index for the manufacturing sector in Germany in August amounted to 62.7 points against expected 65 points. This is according to preliminary data published by Markit. The German industrial sector sees the upcoming months in slightly less optimistic colors than expected by the market, said Dom Maklerski TMS Brokers in the commentary. Data on France and the euro zone were also released on Monday.

The PMI index is a leading indicator and aims to show the outlook for the economy. The index value above 50 points means recovery in the sector, and below – shrinkage of the industry. It is calculated on the basis of five sub-indices – new orders, production, employment, delivery times, and inventory of purchased items.


Germany – economy

PMI estimates for the largest European economies were published on Monday. Markit data shows that in August the PMI for the German industrial sector was 62.7 points. While in July it was 65.9 points. The consensus indicated that the PMI in August will be at 65 points.

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In turn, the PMI for the German service sector was better than expected. It was at the level of 61.5 points. against expected 61 points. In July it was 61.8 points.

“The mood in the German economy is still positive (the survey results above 50 points), but the pace of economic recovery is slowing down. This is largely due to the fact that a significant part of the rebound in the previous months has been realized, which means that the space for further positive surprises is running out “- we read in the TMS Brokers comment.

As indicated, the industrial sector “is burdened with bottlenecks in the global supply chain (with new orders still flowing in).” “The details of the study indicate a further improvement of the situation on the labor market, which is primarily a reflection of the improvement in the service sector,” he added.

Data from France were also released on Monday. The PMI index for industry fell from 58 points. up to 57.3 points The consensus assumed the reading at 57.2 points. PMI for the service sector was 56.4 points, forecasts were 56.3%. In July, the PMI for the French service sector was 56.8 points.

Markit’s estimates were commented on by mBank’s economists on Twitter. “PMI indices for Europe are lower than expected (France and Germany have already come out). In the background, the theme of supply constraints and growing backlogs are again strongly emphasized. Record increases in costs are also burdensome for production. Services are holding well” – indicated in the entry .

Michał Stajniak from XTB pointed out that the number of new cases of coronavirus infections in key European economies is counted in thousands or even several thousand. “In Germany, the number of cases has increased to the largest since the middle of the second quarter. Despite the fact that we are introducing limited restrictions and there is a risk of a larger scale, the mood of entrepreneurs in Europe is not falling very much. PMI indices for services in Germany and France remain at high levels – 61.5 and 56.4 respectively. The situation is slightly worse in industry, although entrepreneurs still indicate strong development “- he indicated.

“Larger declines in industrial PMI are related to shortages of individual components or raw materials. Of course, we have concerns about a reduction in demand somewhere in the longer term, although this is not a problem at the moment,” added Stajniak.


On Monday we also got to know the preliminary reading of the euro zone. Markit data shows that in August the PMI index for the industrial sector was 61.5 points, and for the services sector – 59.7 points. “The solid pace of economic recovery in the euro zone was sustained in August. The PMI index retreated slightly, but the details of the survey show concern,” DM TMS Brokers pointed out in the commentary.

It noted that “the spread of the Delta variant of the coronavirus is indicated as a risk factor for the coming period”. “The development of the epidemic reduces the demand, but also deepens the problems in the supply chain. However, the supply is still not able to meet the demand, which results in higher selling prices of goods and services. There are many indications, however, that the inflationary pressure is approaching the peak” – it was noted.

Main photo source: Shutterstock

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