According to the IHS Markit survey, the mood among European purchasing managers deteriorated further in July. While the industrial index fell to its lowest level for more than six years (46.4 points), the mood among service providers remained comfortable despite a slight decline (53.3 points). The comprehensive composite index thus stands at 51.5 points after 52.2 points in the previous month. The pronounced weakness in the industry is primarily attributable to the poor mood in Germany. In view of this, an economic recovery cannot be expected at the beginning of the third quarter on the basis of the survey results.
In Germany, the dichotomy in sentiment between industry and service providers remains, as the index for industry fell to its lowest level since July 2012 at 43.1 points. The sentiment barometer for the service sector also declined, but at 55.4 points it remains comfortable in the expansion area. The industry is suffering from falling incoming orders and, above all, significantly lower export orders. According to IHS Markit, the result for export business was the worst in ten years. The more than clouded order situation has also resulted in declining employment intentions in industry. At the beginning of the third quarter, German industry is increasingly becoming an economic problem. And an improvement is not in sight, because business expectations have fallen further.
In France, too, the mood among purchasing managers has deteriorated in both areas. According to the first publication, the composite purchasing managers‘ index is at 51.7 points after 52.7 points in the previous month. Both industrial and service measures declined. However, the dichotomy is not so pronounced in France. The index for the industry is exactly at the neutral mark of 50 index points, the index for the service provider at 52.2 points. According to IHS Markit, the weaker results in July are attributable to slower growth in incoming orders and declining sales in industry.