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Further Weakness In Eurozone Manufacturing

James Boston
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Further Weakness In Eurozone Manufacturing

Markit Economics have this morning provided updates to the Eurozone’s Purchasing Managers Indices (PMI) in the form of preliminary September numbers. The overall Composite reading has fallen marginally from 52.5 in August to today’s 52.3, this was expected to remain stable at the August level. Underlying this is a further fall in the Manufacturing data, this now appears to be reading at 50.5, which represents a drop from the August number of 50.7, this moderation was fully anticipated by the market. The more surprising aspect of today’s PMI data however is the unexpected fall off in the Services sector, this now stands at 52.8, down from the August reading of 53.1 and missing the consensus estimate reading for 53.0.

The German Composite PMI is hinting at overall expansion this month, the latest reading is for 54.0, this is an increase on the August figure of 53.7 and clearly beats the market consensus estimate for a number closer to 53.5. Once again the Manufacturing PMI has disappointed, this indicator has fallen to 50.3 from the August reading of 51.4, the drop off is significant in it’s magnitude, weak Manufacturing numbers were anticipated but only in the region of 51.2. The German Services PMI has once again been shown to be carrying the burden of sectorial growth, this month’s reading has again registered expansion, at 55.4 the Services PMI easily tops the August measurement of 54.9 and clearly beats the market consensus estimate for 54.6

Germany, as the Eurozone’s largest economy, is a major contributor to the overall figures. The German figures however remain in keeping the recent trends which favour Services over Manufacturing, this points towards a reconfiguration elsewhere in the Eurozone. The French numbers for example have this morning shown unexpected strengthening in the Manufacturing sector at the expense of the previously performing Services area.

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