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EMU CommentEurozone PMI stalls as manufacturing gloom deepens amid fears of cross-sector spillover risks

  1. Eurozone PMI stalls as manufacturing gloom deepens amid fears of cross-sector spillover risks
  2. Germany: Manufacturing drags PMIs to unexpected new lows
  3. France: Expansion eases as manufacturing slowdown continues
Eurozone PMI stalls as manufacturing gloom deepens amid fears of cross-sector spillover risks
The Eurozone Flash Composite PMI was 50.4 in September compared to 51.9 in August, while Manufacturing PMI was 45.6 compared to 47 and Services PMI was 52 compared to 53.5, all below expectations. The Eurozone economy shows signs of stalling as demand for goods and services fell at the fastest rate in over six years. A deep manufacturing recession plagues the region and does not seem to be bottoming out. Output fell at the sharpest pace since 2012 and was accompanied by a slower service sector expansion, raising the spectre of cross-sector spillovers. Jobs growth and price pressures remained muted and sentiment about the outlook was among the lowest for seven years.
Germany: Manufacturing drags PMIs to unexpected new lows
The German economy contracted in September, as the downturn in manufacturing refused to bottom out and service sector growth lost pace. Flash Composite PMI was 49.1 in September compared to 51.7 in August, Manufacturing PMI was 41.4 compared to 43.5 and Services PMI was 52.5 compared to 54.8, all below expectations. In particular, the manufacturing PMI series shows lows not seen since the Global Financial Crisis. Firms reported weaker demand and a more pessimistic activity outlook. Output compression came in conjunction with easing price pressures, as average charges for goods and services rose at the slowest rate for over three years.
France: Expansion eases as manufacturing slowdown continues
The French Flash Composite PMI was 51.3 in September compared to 52.9 in August, Manufacturing PMI was 50.3 compared to 51.1 and Services PMI was 51.6 compared to 53.4, all below expectations. Growth continues to be underpinned by the service sector, although the rate of growth recorded by service providers decelerated to the slowest since May and remained modest overall. The latest data suggest concerns over negative spillover effects from the manufacturing sector into the service sector have become more profound, and these risks are likely to weigh on economic growth going forward.

 


Disclaimer
 Erik Meyersson

Erik Meyersson

Senior Economist

Eurozone

erme03@handelsbanken.se

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