Mixed PMI results in Europe today
London (Aug 4) Services and Composite PMI's have been robust in Europe so far this morning. This coupled with the decent manufacturing numbers yesterday shows that the continent is recovering overall albeit at an unbalanced pace.
In this round of numbers, the U.K. services PMI number printed above expectations, and the services sector makes up for a large amount of the U.K. GDP. Although the data reading beat expectations the report sounded a gloomy tone. It noted this is the weakest rise in business activity since March. It seems a little obvious as since March the economy has been moving out of the COVID-19 lockdown restrictions. Input cost inflation and staff shortages are still a major concern and a substantial loss of momentum was seen for new business growth during July.
Tim Moore, Economics Director at IHS Markit, said “July data illustrates that recovery speed across the UK economy has slowed in comparison to the second quarter of 2021. More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we've already seen the peak phase of pent up consumer spending".
In contrast, Eurozone business activity rose at its fastest rate in just over 15 years during July, with steep manufacturing output growth complemented by an accelerated expansion of services activity.
Sounding a warning sign Chris Williamson, Chief Business Economist at IHS Markit said "Worries about the Delta variant have become more widespread, however, subduing activity in some instances and raising concerns about the possibility of virus restrictions being tightened again. Hence services growth in July was slightly less marked than the earlier flash estimate and future expectations cooled to the lowest since March, presenting a significant downside risk to the outlook and hinting that growth could begin to slow again as we head toward the autumn."
German Services PMI (Jul) 61.8 vs exp 62.2 prev 57.5
EU Services PMI (Jul) 59.8 vs exp 60.4 prev 58.3
U.K. Services PMI (Jul) 59.6 vs exp 57.8 prev 62.4
EU Retail Sales (MoM) (Jun) 1.5% vs exp 1.7% prev 4.1%
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