What are the key takeaways from Germany's flash July manufacturing PMI?

[John Naronha]

[Ignatius Bose]

Germany’s flash manufacturing purchasing managers index slipped to 43.1 in July from 45.0 the previous month, highlighting the slowdown in trade from Europe’s export powerhouse. Noticeable declines were seen in new orders, employment and inventories although the flash services PMI coming in at 55.4 from 55.8, indicating that the services sector was holding up, at least for now. Economists from Barclays stated in a note to clients that while the survey data is worse than what’s essentially trending on the ground, the downside risks have heightened following the troubled US-China trade conflict, the uncertainty surrounding Britain’s exit from the European Union and the political tension in Italy, which are all likely to flare up again in autumn. Germany’s manufacturing output, which is the weakest it has been in seven years, could push the European central bank on Thursday to tweak its earlier guidance to hold interest rates at current levels until mid-2020, paving the way for an interest rate cut as early as September. Markit’s flash PMI reports are based on about 85% responses during the month with the final result updated in the first week of the upcoming month.