3 Numbers: German Expansion Continues, Eurozone, US Manufacturing
James Picerno | Apr 23, 2015 02:07AM ET
An early look at the macro profile for the start of the second quarter is the main event today for Europe and the US via flash estimates of purchasing managers indexes (PMI) for April. At stake are two key macro questions: Is the Eurozone’s mild recovery still intact and what are the odds that the US economy’s first quarter weakness was just a temporary blip that will give way to a revival in growth in Q2?
noted this week.
Today’s initial estimate of the manufacturing PMI is expected to support the case for optimism. Econoday.com’s consensus forecast sees the index ticking higher to 53.0 for April from 52.8 in March. In other words, a moderate growth rate remains the crowd’s outlook for manufacturing, a key sector for Germany’s export-driven economy.
reported that the Eurozone economy is on a “sustainable recovery path,” according to a majority of economists recently polled by the news organiSation. “Gross domestic product growth is expected to average a steady 0.4% per quarter until mid-2016, giving a 1.4% annual rate this year and 1.6% in 2016,” Reuters reported. “Although those numbers are largely unchanged from the March poll, 23 of 55 common banks who participated in both surveys moved annual predictions higher.
Today’s update of the manufacturing PMI will provide a reality check for the recent improvement in macro expectations. For the moment, the future still looks encouraging, based on Econoday.com’s consensus forecast. Economists anticipate the flash reading for the manufacturing PMI will tick up to 52.6 from 52.2 in March. Roaring growth is nowhere in sight, but a steady if modest recovery still looks like a reasonable view.
said.
Is the good news a sign that we’ll see stronger numbers generally for this quarter’s macro profile? An early clue arrives in today’s flash data for manufacturing via Markit’s PMI. This indicator has been on the rise for several months and today’s update is on track for more of the same. Econoday.com’s consensus data points to another rise, pushing the April PMI to 56.0 vs. 55.7 in the previous month.
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Note, however, that the competing ISM Manufacturing Index has been sliding since last November, falling to 51.5 in March - close to the neutral 50.0 mark that separates growth from contraction. One of these sentiment metrics is misleading us. It’s unclear which benchmark will blink first, but if today’s PMI update for April holds on to its recent gains or rises further, we’ll have a new reason to doubt the ISM’s dark forecast.
Disclosure: Originally published at Saxo Bank TradingFloor.com
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