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Roundup: Eurozone manufacturing index slips to 13-month low

Xinhua, September 2, 2014 Adjust font size:

The final seasonally-adjusted eurozone manufacturing purchasing managers' index (PMI), a gauge of the industry activities, slipped to 50.7 in August from 51.8 in July, the lowest reading since last July, according to a Markit survey published Monday.

A reading above 50 indicates expansion, while a reading below 50 represents contraction. The headline PMI was also below its earlier flash estimate of 50.8.

The data signaled a broad easing in the manufacturing recoveries underway across much of the currency union.

As regard to national data, rates of expansion slowed in Spain, the Netherlands and Germany, with Ireland a noticeable exception where the PMI recorded the highest level since the end of 1999.

Greek PMI edged back above the 50.0 mark in August, while the rate in Austria held steady.

France remained the laggard, with its PMI at 46.9 -- the sharpest rate of decline since last May. Italy dropped back to into contraction following 13 months of expansion with its PMI at 49.8.

Though eurozone PMI stayed above the 50-point watershed, analysts voiced concern over the possible impact from recent geopolitical uncertainties.

"Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible," Rob Dobson, senior economist at Markit, said.

"This is also the case on the demand front, with growth of new orders and new export business both slowing in August," he added.

The growth in the eurozone stalled in the second quarter and annual inflation rate dropped to 0.3 percent in August, indicating a danger of deflation.

The eurozone's seasonally-adjusted unemployment rate was still as high as 11.5 percent in July.

Many people worried the region may lose its recovery momentum amid the ongoing Ukraine crisis. Such a scenario put more pressure on the European Central Bank (ECB) to take immediate stimulus to boost growth and bring the European economy on track.

"The slowdown in industry is likely to add further fuel to the fire for analysts expecting additional monetary or fiscal stimulus to be implemented," Dobson said.

It has been three months since the ECB took its deposit rate into negative territory and launched an aggressive liquidity package. The euro hit a one-year low against U.S. dollar on Monday.

The ECB will hold its monthly meeting on Thursday. Most economists do not expect ECB head Mario Draghi to increase the level of stimulus policy.

"Eyes will now turn to the services PMI numbers on Wednesday for further clues on underlying growth momentum and whether policymakers can continue to wait for earlier measures to start to deliver," Dobson added. Endit

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