October 29, 2012
The eurozone flash composite PMI decreased 0.3 points to 45.8 in Oct (lowest since June 2009) versus an expected increase to 46.4. The fall was due to a decline in the German PMI that was only partially offset by a rise in the French PMI. The US Market Manufacturing PMI was broadly unchanged at 51.3 while the Chinese PMI (private sector) rose 1.2 points to 49.1. Given the performance of France and Germany compared to that of the overall index, it would appear that peripheral countries, on average, may post a small increase in Oct PMI. They would, however, still be in recessionary territory. Also, the lower German PMI and the fall in the ifo index in Oct from 101.4 to 100.0 point to downside risks to Q4 growth. Some mechanistic regressions based on different components of the ifo and PMI signal a Q4 GDP decrease between 1/4% and 1/2% qoq in Germany. The Bundesbank pointed in the same direction with its latest monthly bulletin, in which it expects a good Q3 but GDP contraction in Q4. So not only the peripheral countries but also the core countries could see their real GDP shrink in Q4 this year. In the US, the drop in the new order PMI component, which is fuelling fears that the fiscal cliff is forcing firms to put business on hold, signals that the US economy's lacklustre growth (2.0 % qoq ann. in Q3) should not accelerate much in Q4. This also applies to China where the PMI increased in October but is still at a level consistent with 7 1/2% to 8% GDP growth (Q3: 7.4%).
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14.06.2013
