| European manufacturing PMIs fade further |
| 01.12.11 11:55 | |
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Conditions continuing to deteriorate... Further declines in manufacturing PMIs were widespread across many European countries in November. The aggregate Eurozone manufacturing PMI was unrevised from the flash estimate, declining from 47.1 to 46.4 - the weakest since mid-2009. Within the detail, all of the activity balances (output, new orders, export orders and employment) fell over the month. Thus far in Q4, the aggregate Eurozone manufacturing PMI is well below its Q3 average (46.7 vs 49.3). With the services PMI having similarly declined notably in recent months, overall the PMIs are consistent with the view that the Eurozone is slipping into recession in Q4. We expect a 0.3% QoQ contraction in GDP over the quarter, and with conditions still deteriorating and the sovereign debt crisis continuing to weigh, we expect more pronounced weakness in 2012 Q1. See our recently-published Global Year Ahead forecasts here. In Germany, the manufacturing PMI fell from 49.1 to 47.9, unrevised from the flash estimate. Within the detail, weaker activity was widespread, with all of the output, new orders and export orders balances showing declines. At the same time, backlogs of work fell a little further after a sharp decline last month, lying much lower than their Q3 levels. Employment continues to be the bright spot though: at 54.3 it remains relatively healthy. Overall, the German PMIs chime somewhat with other evidence: although remaining notably stronger, both the IFO and ZEW surveys also point to ongoing softening in the manufacturing sector in recent months, while the German labour market remains surprisingly robust. In France, the flash estimate of 47.6 was revised down a touch to 47.3: a notable decline from 48.5 in October. While the fall in the output balance was relatively moderate, the declines in both new domestic orders and export orders were somewhat sharper, indeed with both lying at low levels of around 44. In Italy, the PMI rose from 43.3 to 44.0, contrasting with market expectations of a decline to 42.8. Nevertheless, conditions in the sector over the last 2 months as a whole are still notably below their Q3 levels of 48.5. Many of the components have mirrored the headline PMI, with output, new orders and export orders also having been markedly lower in October and November than in Q3. In Spain, the manufacturing PMI nudged down from 43.9 to 43.8, remaining very weak. Output, new orders, backlogs and export orders all nudged up, but employment fell sharply over the month (44.2 to 42.0) to its lowest since late-09. source: Bank of America ML |
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