Price pressures grew in the euro zone manufacturing sector in July and growth remained robust to support expectations the ECB will step up the pace of rate hikes, a survey found today.
The RBS/NTC euro zone Purchasing Managers Index (PMI) showed the pace of growth in manufacturing output, new orders and job creation slowed slightly from last month's six-year highs, but prices paid and charged by manufacturers rose at a faster pace.
The overall PMI, based on a survey of 3,000 companies, slipped to 57.4 in July, in line with economists' forecasts and still well above the 50 line that separates growth from contraction, from 57.7 in June.
The slight moderation in the headline index was broadly in line with similar easing in other leading indicators including the German Ifo business confidence survey and Belgian business confidence.
"It's still pointing to robust growth and should keep the ECB on track for further rate tightening," said Matthew Sharratt at Bank of America in London.
Many economists also expect the ECB to step up the pace of rate rises, taking rates to 3.5 per cent by year-end. It began raising rates from historic lows of 2 per cent last December.
The employment index also slipped, to 52.3 in July from June's 53.1, showing the pace of job creation slowing, and the output index eased to 59.4 from 60.1.