A weak manufacturing recovery of sorts is underway in Europe. How long it lasts remains in question, with France not participating in the recovery.

The Markit Eurozone Manufacturing PMI® shows Final Eurozone Manufacturing PMI at 26-month high of 51.4 in August (July: 50.3).

Country PMI Rankings

The upturns in production at German, Italian, Dutch and Austrian manufacturers all strengthened on the back of improving inflows of new business. Output also rose further in Ireland and returned to growth in Spain as a result of an increase in new business. All of these nations also reported higher levels of new export business, with rates of increase hitting 28-month highs in Italy and the Netherlands, a 32-month record in Spain and a 29-month high in Austria. German exports rose following five months of decline, while the rate of growth in Ireland held broadly steady at July’s seven-month peak.

In contrast, output, new orders and new export orders fell at French manufacturers. Production also declined in Greece, despite stabilisations in both total new business and foreign demand following prolonged spells of contraction.

India Manufacturing PMI Contracts for First Time Since March 2009

The HSBC India Manufacturing PMI™ shows Manufacturing operating conditions deteriorate for first time in over four years.

Business conditions in the Indian manufacturing sector deteriorated during August for the first time in over four years, with both output and new orders falling at faster rates. Export orders also declined, ending an 11-month sequence of growth.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI™) fell from 50.1 to 48.5 in August, indicating a moderate deterioration of business conditions. The latest index reading was the lowest in four-and-a-half years and the first sub-50.0 reading since March 2009.

Amid reports of fragile economic conditions and subdued client demand, new orders placed at Indian manufacturers fell solidly in August. Furthermore, the rate of contraction accelerated to the fastest since February 2009. Order book volumes across the intermediate goods sector decreased at a sharp and accelerated pace, while consumer goods producers registered a slight decline.

New business from abroad also fell, ending an 11-month sequence of growth. Anecdotal evidence suggested that competitive pressures increased and that demand from key export clients was weaker. Consequently, Indian manufacturers reduced their production volumes for the fourth consecutive month in August and at the fastest rate in four-and-a-half years.

Clearly this is not good for the Rupee. Nor is the outlook promising for India’s preposterous growth target of 6 percent.

Mike “Mish” Shedlock