European Economic Data – 10/24

September rebound and the feelgood central bank mania, such that it was, is over.  Germany looks to have finally been dragged into the economic morass by the periphery:


European Manufacturing PMI: 45.3 vs. Exp. 46.5 (Prev. 46.1)

– European PMI Services: 46.2 vs. Exp. 46.4 (Prev. 46.1)

– European PMI Composite: 45.8 vs. Exp. 46.5 (Prev. 46.1); lowest since June 2009

German Manufacturing PMI: 45.7 vs. Exp. 48.0 (Prev. 47.4)

– German Services PMI: 49.3 vs. Exp. 50 (Prev. 49.7)

German IFO Business Climate: 100.0 vs. Exp 101.6 (Prev. 101.4)

– IFO Current Assessment: 107.3 vs. Exp 110.0 (Prev. 110.3)

– IFO Expectations: 93.2 vs. Exp 93.6 (Prev. 93.2)


At 48.1 in October, the seasonally adjusted Markit Flash Germany Composite Output Index was down from 49.2 during September and signalled a further moderate reduction in overall private sector business activity. The index has now posted below the neutral 50.0 value for six consecutive months. With the latest reading close to the average for Q3 2012 (47.9), the latest survey suggests an ongoing lack of momentum across the German private sector economy.


Output continued to fall in response to a further marked contraction in new orders. The rate of decline in new business eased slightly since September, which had seen the largest drop since June 2009.

Slightly weaker rates of decline in both business activity and new orders in the service sector contrasted with faster contractions in the goods producing sector. Subsequently, manufacturing again saw the steeper downturn of the two sectors.


Although moderating since the previous month, rates of contraction remained considerable for both services and manufacturing output.  Panellists generally attributed lower activity levels to a further drop in  incoming new business. The index measuring overall new work was only marginally above September’s 41-month low, and remained indicative of a steep pace of decline.

Anecdotal evidence pointed to weak demand conditions amid a difficult economic climate. There were reports that clients, especially some firms in the autos sector, had postponed orders and reined in investment due to a lack of confidence in the outlook. Manufacturers again recorded a particularly steep drop in new work, primarily reflective of domestic weakness but also affected by the fastest fall in export sales since May 2009.


German business confidence unexpectedly fell to the lowest in more than 2 1/2 years in October as the sovereign debt crisis damped growth in Europe’s largest economy.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 100.0 from 101.4 in September. That’s the sixth straight decline and the lowest reading since February 2010. Economists predicted an increase to 101.6, according to the median of 39 forecasts in a Bloomberg News survey.


Ah, the dreaded “unexpected” decline.  It’s only unexpected if you actually believe currency debasement is positive for anything outside of the financial economy cartel.  “Economists predicted” – there’s you’re problem.

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