Tip: To personalise the research list, click the gear symbol above.

Choose type:

EMU CommentPMI almost at a four-year low

  1. Q4 growth potential weakening further
  2. Weakness especially found in German PMI
  3. Making it harder on the ECB
Q4 growth potential weakening further
The PMI composite index disappointingly fell again in November for a third consecutive month, this time to 52.4 from 53.1 in October, whereas a rather stable development was expected. This is the lowest activity since December 2014. Signs of weakness thus extended into the fourth quarter, making it less likely that we will see a clear rebound in GDP growth here (first graph).
Weakness especially found in German PMI
While the French composite PMI index was almost stable at 54.0 in November, weakness was more visible in the German PMIs (second graph). Here the composite PMI declined markedly for another month, taking it to a meagre 52.2 - the lowest level in almost four years. While German activity growth slowed another month within manufacturing, the index decline was steeper within services this time. The weaker service sentiment is likely supported by the recent weaker stock markets and weaker actual retail sales with still waning consumer confidence, which disappointed in November. Additionally, the improvement in the labour market seems to have geared down a bit in recent months. While manufacturing sentiment has likely been burdened by a slowdown in the auto industry due to new emission test standards, we have not yet seen any clear signs of a rebound in activity and thus that weakness is temporary (third graph).
Making it harder on the ECB
This was the last PMI survey before the ECB policy meeting on December 13. At the previous policy meeting, the ECB kept the assessment of weakness being temporary and related to some specific sectors (autos), and therefore risks to the outlook were kept as “balanced”. The minutes of the meeting underlined that, if anything, there were some governing council members arguing that risks are tilted to the “downside”. This makes the December meeting interesting, as we also receive updated staff forecasts. But either way, we do not expect the ECB to deviate from the planned end to the asset purchase programme as the bar for deviating from the normalisation plan is likely high.

Source: Macrobond


Source: Macrobond


Source: Macrobond


Rasmus Gudum-Sessingø

Senior Economist


Latest analyses


Morgenmelding Danmark


Morgenmelding Danmark


Makroøkonomisk Ugefokus