The European issue rests on stocks – Newspaper Kommersant No. 154 (7355) of 08/24/2022

Composite Purchasing Managers’ Index (PMI) in the euro area according to S&P Global fell to 49.2 points in August against 49.9 points in July. For the second month in a row, the value of the indicator indicates a decline in business activity (below 50 points). In services, the indicator remained in the positive zone, amounting to 50.2 points, but the value also turned out to be the lowest over the past 17 months (in July – 51.2 points), in the industry, PMI remained almost unchanged – 49.7 points against 49.8 in July (the output sub-index in industry slightly increased – 46.5 points against 46.3 points in July). For the second month in a row, there has been a significant decline in new orders (industry has been declining for three months now, overproduction led to the highest increase in stocks in the last 25 years), while lowering demand is affected by higher prices for finished goods. Producer price growth, however, slowed down in August – following commodity prices (the increase was the weakest in the last year), supply delays are also gradually resolved – they were the lowest since October 2020, S&P notes. The agency’s experts expect that the decline in producer prices will gradually lead to a slowdown in consumer inflation.

The decline in activity is noted primarily in large economies – in Germany, against the background of a decrease in output in the manufacturing sector, the strongest decline in the composite index since June 2020 was recorded (to 47.6 points against 48.1 points in July), in France, activity decreased for the first time for a year and a half (up to 49.8 points against 51.7 points) – also against the backdrop of a decline in industry and a slowdown in the service sector. Elsewhere, activity continued to grow, albeit at a slower pace. “The indicator data indicates a contraction in the economy in the third quarter – the rise in the cost of living has led to the rapid exhaustion of the effect of the removal of coronavirus restrictions in the service sector, while an excess of stocks will prevent the recovery of activity in the industry,” S&P notes. ING Bank points out that the reduction in inflation, which could support demand, will depend on the impact of energy prices, especially against the backdrop of a new wave of rising gas prices.

Tatyana Edovina