|08-21-2014, 04:01 PM||#1|
Eurozone growth stalls as manufacturing loses momentum
The euro zone economy expanded in August but at very "subdued and fragile" pace, Markit said in its flash Eurozone Purchasing Managers` Index report for August on Wednesday.
This is no surprise news for the 18-nation currency bloc, expanding for the 14 month in a row but still hurt by lingering geopolitical uncertainties hurling from the peripherals. Slowing output growth in the bloc`s largest economy, Germany, helped act as brakes in August, as manufacturing lost momentum. In France, output stabilized as services sector expansion offset sharper decline in Manufacturing.
- Flash Composite PMI falls to 52.8 (2-month low) from 53.8 in July vs. estimated 53.4
- Flash Manufacturing PMI fell to 50.9 (13-month low) vs. 52.7 in July
- Flash Services PMI fell to 53.5 (2-month low) from 54.2 in July vs. estimated 53.7
**Readings above 50 signals expansion, less than 50 a contraction
"Output increased in both the manufacturing and service sectors, with service providers again reporting the sharper rate of expansion. However, rates of growth eased in both sectors. The extent of the slowing was much sharper in manufacturing, taking its rate of expansion to the weakest in the current 14-month sequence of production growth," Markit said.
Germany composite PMI fell from July`s 55.7 to 54.9 in August, signaling a strong, albeit weaker expansion in Germany private sector output. In France, the manufacturing PMI fell sharply to 46.5 in August from 47.8 in July, missing expectations of 47.8. However, French PMI services advanced to 51.1 in August from 50.4 a month earlier, beating analysts’ expectations of 50.2.
In the second quarter, the Eurozone economy stalled. Germany`s economy shrank for the first time in more than a year. The bigger concerns were France and Italy, where respectable rates of growth aren`t even in sight. Although France is somehow stabilizing, today`s survey is adding more evidence that European Central Bank must to do more support the waning Eurozone economy.
Following the PMI release, the EUR/USD reversed the incline moving towards 1.3265 after hitting a session high of 1.3278.
UK retail sales grow but lower than expected in June
The volume of sales at UK retailers grew for the second month in July, although it was less than expected following a monthly drop in May.
Retail sales index including fuel rose 0.1% compared with June’s reading that was revised to 0.2% and lower than expectations of 0.4%. Year-on-year, sales at UK retailers grew 2.6%, down from 3.4% for the previous reading and the lowest of expectations for a 3.1%
According to the National Statistics Office in London, the average prices of goods sold showed a decline during July by 0.9% compared to the same period a year earlier. The only addition was coming from the rise in food prices, as fuel and of non-retail stores prices declined.
The general level of prices increased from the lowest level in five year recorded in May, and just shy of the target set by the Bank of England around 2% but still for the lowest for the sixth consecutive month.
The CPI annual recorded a 1.9% rise in June from 1.5% in May beating expectations for growth of 1.6%, and recorded month-on-month growth by 0.25 after it shrank in May by 0.1%.
More, retail sales index excluding fuels in July growth of 0.5% from a contraction rate of 0.1% in June beating expectations for growth of 0.4%, and the annual level of growth fell to 3.4% from 3.8% recorded a month ago.
The last minutes of the BoE’s policy meeting showed a split between members of the Monetary Policy committee about the interest rate decision and for the first time since 2011. The majority within the Committee pressed on weak wage growth and merits delaying interest rate hikes, saying early rise may boost pound, impede rebalancing and CPI outlook didn`t justify rate increase.
The GBP/USD fell to its lowest level since March around 1.6582 compared with the day’s open at 1.6592.
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