Eurozone growth maintains cruising speed in July

The Eurozone composite PMI dropped from 56.3 to 55.8 in July, the lowest in six months, notes Bert Colijn, Senior Economist at ING and explains that this reading still points to robust growth, but no acceleration.

Key Quotes

“With the Eurozone economy growing at a very decent cruising speed, the lack of selling price growth indicated in the survey seems most worrying for the ECB.”

“While the PMI has been falling slightly over the past months, this is by no means an alarming sign. July’s levels are still consistent with output growth of around 2% annualized growth. Most underlying factors still point to continued strength for growth in the months ahead. New orders and backlogs of work continued to growth, albeit at a more subdued pace. Growth in employment is still near a decade high, with manufacturing businesses indicating the second fastest pace of job growth recorded.”

“Over the past months, survey indicators had been very optimistic compared to hard data about the economy and recently it seems like the two are starting to get back in sync with each other. Surveys are becoming somewhat less euphoric, while production and sales are improving. Today, IMF increased its growth forecast for the Eurozone for 2017 and 2018. We have also become more optimistic over the past months and expect growth to come in at 2% this year.”

“Even though growth remains strong, inflation is likely to remain weak. Businesses indicated that selling price growth weakened further, to the lowest rate since January. This comes on the back of a further weakening in input price growth. This confirms our view of inflation below 1.5% for a while to come, making life hard for the ECB. We expect a gradual run-up to a tapering announcement and these weak price growth signals are in line with that.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.