Euro Macro: soft patch continues – ABN AMRO

Analyst, Nick Kounis, at ABN AMRO explained that the eurozone PMI surveys suggest the soft patch in the eurozone economy is continuing into Q3. The composite output index (a tracker of GDP growth) slipped to 54.3 in July from 54.9 in June. 

Key Quotes:

"That is above the low of 54.1 in May but below the elevated levels (around 58) seen at the turn of the year. At current levels, the indicator is consistent with economic growth of 0.4% qoq, which is roughly around trend."

"A fall in the services PMI (54.4 from 55.2) offset a modest rise in the manufacturing PMI (55.1 from 54.9). However, the details of the manufacturing PMI were not encouraging, with new orders continuing to weaken in July, driven by an ongoing slowdown in export growth."

"We think that somewhat firmer global growth and ongoing solid domestic fundamentals should see economic growth firming somewhat later in the year. However, the risks are skewed to the downside."