It's Just A Matter Of Time Before Declining PMI Will Show Up In Eurozone
Sober Look | May 25, 2012 03:32AM ET
European officials keep insisting that the euro area as a whole is not yet in a recession. That's wishful thinking because the latest PMI numbers say otherwise. PMI tends to be a leading indicator for GDP growth. PMI of 50 means no change.
This is not just driven by the periphery. While Germany has stalled...
France is undergoing a contraction .
It's just a matter of time before the recession becomes visible in the GDP numbers.
Capital Economics: - The fall in the euro-zone composite PMI, from 46.7 to 45.9, was sharper than the consensus forecast of a decline to 46.5 and left it consistent with quarterly falls in GDP of about 0.5%. After narrowly escaping a return to recession in Q1, it now appears very likely that the economy will experience a renewed contraction in the second quarter.
May’s fall was due to declines in both the services and manufacturing indices. And worryingly, the limited available breakdown by country revealed that the downturn is affecting the core as well as the periphery, with both the German and French composite PMIs falling further below the “no-change” level of 50.
What’s more, the previously resilient German Ifo measure of business confidence dropped much more sharply than expected. The fall from 109.9 to 106.9 reversed the gains of the previous five months and reflected weakening current conditions and business expectations across a range of sectors. Most notably, the drop in the retail index will have dampened hopes of a strong consumer recovery.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.