EU manufacturing PMI declines in July

EU, Russia, Ukraine to discuss 10 year gas transit contract

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The euro area’s manufacturing sector continued to contract during July, according to a London-based global data company on Thursday. IHS Markit reported that the eurozone manufacturing Purchasing Managers’ Index (PMI) contracted at the fastest rate since December 2012 to stand at 46.5 points last month, down from June’s 47.6.

Of the three market groups categories covered by the survey, ongoing contractions were seen in the intermediate and investment goods sectors, it said. For the latter, the deterioration was the greatest since November 2012. In contrast, the data company noted that growth was sustained among producers of consumer goods.

As a critical measurement to indicate the health of the manufacturing sector, the monthly PMI indices based on surveys and national data show a growth with a value above 50 points, a contraction with a level below 50 points, compared to the previous month.

“Germany remained a source of weakness, with its manufacturing economy recording its sharpest deterioration in operating conditions for seven years. Austria recorded its lowest PMI level in just under five years, whilst there were also below 50.0 readings seen in France, Ireland, Italy and Spain, it said.

The monthly report showed that the downturn in the overall manufacturing economy was driven by a sharp fall in new orders. Latest data showed that the decline was the second sharpest recorded by the survey in just over six years — surpassed only by a contraction in March. As ongoing trade tensions, difficulties in the automotive industry and political uncertainties continued to weigh on demand both in internal and external markets, it added.

The European Commission offered Russia and Ukraine to make a gas transit contract for ten years from the start of 2020 and this proposal will be discussed at trilateral gas talks of Russia, Ukraine and the EU at the ministerial level, a diplomatic source in Brussels told TASS on Thursday.

Vice President of the European Commission in charge of the Energy Union Maros Sefcovic sent letters to Moscow and Kiev last week with proposals to hold trilateral ministerial talks on conditions of transit and gas supplies through Ukraine from January 1, 2020 on September 16 in Brussels. The date has not yet been confirmed formally but both parties already stated the consent in principle to hold talks, the source said.

The main topic of trilateral talks will be the proposal of the European Commission to sign a gas contract for ten years from the start of 2020, the source said. Russia said earlier it is ready only to consider extension of the current contract for one year.

The last ministerial meeting in Russia-EU-Ukraine format on gas transit was held in Brussels on January 21 and the parties failed to reach understanding there on the issue of Ukrainian gas transit or mutual claims of the Russian gas holding Gazprom and Naftogaz of Ukraine. The decision was made after talks to proceed with consultations after completion of the electing cycle in Ukraine.

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