Eurozone PMI


Eurozone: Eurozone business activity slows in September, suggests growth will be stable in Q3

September 23, 2015

The Eurozone Composite Purchasing Managers’ Index (PMI) dropped in September, which suggests that GDP in the common-currency area will likely maintain the same pace of growth of Q2 in Q3. According to Markit, which elaborated a preliminary flash PMI on 23 September, the indicator fell from a revised 54.3 in August (previously reported: 54.1) to 53.9. The print was broadly in line with the 54.0 the markets had expected. Despite the drop, the indicator continues to hover above the 50-threshold that separates expansion from contraction in the Eurozone business activity. Moreover, according to Markit, September’s reading pushed the third quarter average of the index to the highest level since Q2 2011.

According to Markit, the monthly drop in September resulted from a fall in both the services and manufacturing sectors. Markit pointed out business activity fell in September, although at a more moderate pace than that of manufacturing. However, according to Markit, “further robust expansion is signaled for the start of the fourth quarter, with growth of new orders hitting a five-month high in September. In addition, Markit stated that an upturn in new businesses prompted firms to hire staff, with employment rising for an 11th consecutive month.

At a country level, the PMI rose in France in September, while it moderated in Germany and in the remainder of the region. Although business activity weakened in Germany, Markit stated that, “the euro area’s largest member state has seen the best quarterly expansion for a year.” Meanwhile, in France business activity picked up in September, but did so from “the near-stagnation seen in August,” suggesting that the recovery was only modest in September.

Markit concluded that, “The September PMI surveys indicate a further steady expansion of the Eurozone economy, but there remains a negative concern for growth to accelerate to a pace sufficient to generate either higher inflation or strong job creation. The survey data indicate that the Eurozone economy expanded 0.4% in the third quarter, in line with the second quarter. This is, however, below what’s generally regarded as its long-term potential growth rate and puts the economy on course to grow by just 1.6% this year.”

FocusEconomics Consensus Forecast panelists expect the economy to expand 1.4% in 2015, which is unchanged from last month’s forecast. For 2016, panelists expect the economy to expand 1.7%.

Author:, Senior Economist

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Eurozone PMI Chart

Euro PMI September 2015

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction
Source: Markit

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