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EMU CommentPMI disappoints due to worsening manufacturing agony

  1. Composite PMI decreased unexpectedly in March
  2. German manufacturing confidence back at 2012 lows
Composite PMI decreased unexpectedly in March
The eurozone Composite PMI index disappointed with a decline to 51.3 in March from previous 51.9. While service confidence was stable as expected, the manufacturing confidence unexpectedly continued its decline from the beginning of 2018 and at 47.6 reached the lowest level since 2013. Overall the PMI Composite index is still comparable with fairly stable GDP growth in the first quarter compared with fourth quarter 2018 (see graph).
German manufacturing confidence back at 2012 lows
Especially German Manufacturing PMI disappointed with an even steeper decline in March to 44.7 (previous 47.6); the most pessimistic reading since July 2012. Even if a part of the weakness still can be explained by the auto industry (strikes and changes to new model lines) as indicated by a rise in suppliers delivery times to the highest level since 2012, its worrying that new orders (and export orders) was the main drag behind the decline. The French Composite PMI index fell back below the 50 threshold, and has now stayed below that in three out of the past four months. Also here especially new orders was a drag on the index, where export orders decreased to a three year low. Yellow Vests protest and postponement of the Algerian election was blamed for playing a part in the weaknesses.

Source: Macrobond


Rasmus Gudum-Sessingø

Senior Economist


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