European industry on the verge of recovery. PMI hits three-year high

In July, the PMI index for the eurozone manufacturing sector reached its highest value in three years. And although it was still a reading below points, these are the next months may bring the beginning of the long-awaited recovery in the European industry.

The “Industrial” PMI for the eurozone in July was 49.8 points compared to 49.5 points recorded in June. This is the highest reading in 36 months, i.e. from July 2022. This is still a result below 50 points – only readings higher than this value signal an increase in activity economic in the sector under study.

- Industry in the eurozone is cautiously gaining momentum. Smaller economies in particular are giving cause for optimism. (…) This broadens spectrum of recovery. With the newly agreed agreement between the EU and the US uncertainty should decrease, which indicates a continuation of the upward trend in in the coming months – this is how Dr. Cyrus De commented on the results of the July study la Rubia, chief economist at Hamburg Commercial Bank.

PMI readings for manufacturing sector of Ireland (53.2 points), the Netherlands (51.9 points) and Spain (51.9 points) and Greece (51.7 points). However, while in the case of the Netherlands it was the highest reading in 14 months, in the case of Greece we are talking about an 8-month minimum.

However, the results for the largest economies of the Eurozone. But there was also visible improvement there. The result for Italy's (49.8 points) was the highest in 16 months, and Germany's (49.1 points) the highest in 35 months. Austria and France fared worse (48.2 points each). Generally however, the readings for individual countries are heading towards the 50-point zone, which three years of severe recession in European industry seems to be a good news.

What is somewhat surprising is the fact that with increasingly positive PMI readings for the eurozone correspond to the disastrous results for Poland. July PMI for Polish industry improved only slightly, increasing from 44.8 points to 45.9 points – reported the analyst firm S&P Global on Friday. This reading indicates – at least theoretically – a sharp decline in activity in the Polish manufacturing sector. Nevertheless, there was he is a bit slower than disastrous result for June. Such a large discrepancy in PMI results for Poland and the eurozone surprise economists and some are told to look for errors in sample selection or seasonal adjustment of data .

Polish industry is in a state of recession or stagnation from spring 2022. Industrial production recorded declines throughout 2023 year, and in 2024 it increased by only 0.3% y/y. After the Covid boom of 2020-22, there was global recession, particularly severe for German industry, which is the largest recipient of Polish production.

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