World Economy

Euro zone factory growth eases in Aug despite modest price rises: PMI


Euro zone manufacturing growth eased last month, despite factories barely raising prices, adding to the European Central Bank's woes as it battles to spur expansion and inflation, a survey showed.

Tuesday's disappointing readings come almost half a year after the ECB began pumping 60 billion euros a month of fresh cash into the economy and a day after official data showed inflation in the 19-country bloc at just 0.2 percent.

An employee works on a Mercedes-Benz S-Class Coupe, in Stuttgart, Germany.
Martin Leissl | Bloomberg | Getty Images

With inflation so far below the ECB's 2 percent target ceiling there is a growing chance the ECB will have to extend its stimulus program beyond the planned completion in September 2016.

Markit's final manufacturing Purchasing Managers' Index was 52.3 last month, below an earlier flash reading that suggested it had held steady at July's 52.4.

It has, however, been above the 50 mark that separates growth from contraction for over two years.

An index measuring output that feeds into a composite PMI, due on Thursday and seen as a good guide to growth, rose to 53.9 from 53.6, above the preliminary 53.8 reading.

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"By nation, the Netherlands, Italy and Ireland remained the most impressive performers," said Rob Dobson, senior economist at Markit. "Although there were signs of manufacturing growth cooling in these countries, this was largely offset by a solid acceleration in Germany, suggesting that the region's industrial powerhouse is taking on more of the growth strain."

An earlier PMI from Germany, Europe's largest economy, jumped to 53.3 from July's 51.8.

The sub-index covering output prices in the euro zone nudged up to 50.5 from 50.4, below the flash 50.7.

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