According to the preliminary findings of the survey of Eurozone purchasing managers, the sentiment barometers only dipped marginally in July compared to the prior month. The Euroland Composite Index lost a bit of ground again, having climbed the previous month. It also fell well short of the high level of the prior year. Nevertheless, given the smouldering trade conflict it was a comparatively robust performance. The survey again signals muted growth at the beginning of Q3 2018. This matches the picture we forecast.
The Euroland Composite Index, so preliminary figures suggest, dipped from 54.9 to 54.3 index points in July on the back of slightly improved assessment by industry, while sentiment among service providers slipped a tick further. The pace of growth was somewhat weaker in July, relatively speaking. According to statements by the purchasing managers polled, weaker order receipts and lower future business expectations played their part here. At the national level, the survey returned slightly better figures in Germany than in France. In the rest of the Euro area, sentiment fell to the lowest figure in 21 months.
Sentiment among German purchasing managers brightened on balance in July. While the service sector sentiment barometer dipped, purchasing managers in industry were by contrast more confident. The Composite Index therefore rose on the month from 54.8 to 55.2 index points, thus reaching its highest level in five months. Growth in order receipts picked up and the strongest increase in four months was seen. Companies in the private sector have, so Markit reveals, continued to significantly expand payroll, while the pressure on prices has also become stronger. Despite the rise, the Composite Index for Germany remains below the high level recorded in 2017. For Q3, the growth prospects for Germany remain moderate.
In France, private sector sentiment has dimmed further. The Composite Index lodged at 54.5 points in July, down 0.5 index points on the month. The decrease is attributable to a more sceptical assessment by service providers. There, the figure dropped 0.6 index points. By contrast, industrial sentiment brightened again. However, the rise in order receipts in the sector was as good as offset by the first dip in the assessment as regards exports. Nevertheless, the purchasing manager indices in France remain overall above the growth threshold of 50 index points and thus continue to indicate economic growth, albeit at what is still a modest pace.