European factories are producing more stuff than they have in over four years. Whether anyone actually wants to buy it is a different question entirely.
S&P Global’s Eurozone Manufacturing PMI came in at 51.9 for July, up from 51.4 in June, keeping the index comfortably above the 50.0 threshold that separates expansion from contraction. The manufacturing output sub-index told an even more bullish story, hitting 52.9 to 53.0, a level not seen since March 2022. That’s a 52-month high, for those keeping score.
The good news stops at the factory gate
Here’s the thing about producing at multi-year highs: it helps if customers show up. New orders rose only marginally in July, while export orders actually declined. In English: domestic buyers are lukewarm, and international buyers are pulling back.
The output surge appears to be driven largely by factories clearing backlogs accumulated during previous slowdowns rather than responding to fresh demand.
