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%).
© Copyright 2013. Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”.
The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made.
In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht. In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange regulated by the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product.