Among economic data, PMI indexes can often be the fastest to show the current picture of the economy. Unlike GDP data, for which one has to wait a long time, preliminary PMIs are published the same month they refer to, with final readings appearing as early as the following month.
The data released today seem to indicate a deterioration in the economy, which could have an impact on stock indexes. For Europe, data from its largest economy, Germany, may be important. The S&P Global/BME Germany Manufacturing PMI for August was revised downward to 49.1 points from a preliminary reading of 49.8 points, indicating a second consecutive month of decline in factory activity. According to this report, there is a sustained decline in new orders, which seemed to affect production levels and slowed the pace of job creation in factories.
On the positive side, companies may have been less pessimistic about the outlook than a month earlier, although concerns about high inflation, uncertainty in the energy market and the risk of an economic slowdown still seem to persist.
The index for the eurozone as a whole was also at a lower level. The S&P Global Eurozone Manufacturing PMI was revised down to 49.6 points in August from an initial estimate of 49.7 points. Manufacturing declined at a similar pace to July, when the deceleration was the strongest since May 2020. New orders once again fell sharply. Weak demand conditions were a major drag on manufacturers in August, reflecting deteriorating purchasing power across Europe with high inflation. In response to the deteriorating economic outlook, manufacturers further reduced their purchasing activity, the report said.
In Poland, the situation does not seem optimistic either. Poland Manufacturing PMI was the lowest since 2020. The S&P Global Poland Manufacturing PMI fell to 40.9 in August from 42.1 in July, below market forecasts of 41.8 points. The reading pointed to the fourth consecutive month of declining factory activity and was the worst since May 2020, as both production and new orders fell sharply. On the price front, costs and fees continued to rise at a slower pace, although high inflation continues to erode purchasing power, with sales from both domestic and international sources falling, a statement to the publication said.
So it seems that economies still may not have reached their, which may also translate into a lack of bottoms in stock market indices. The following indicated their drop today, with Germany's DAX losing 1.7 percent from the start of the session until 10:55 GMT+3, France's CAC40 losing 1.68 percent and Italy's FTSE MIB losing 1.5 percent.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
