Eurozone PMIs: cooling slightly, albeit at a high level

At the beginning of Q4, on balance sentiment among purchasing managers has dimmed slightly. The Euroland composite index fell from 56.7 to 55.9 index points. However, it therefore still remains well above the growth threshold of 50 index points. While the provisional results for the service industry showed a dip, the sentiment yardstick for manufacturing climbed even further.

While this cooling out was also to be seen in the German survey findings, in France sentiment improved. In this context, we can expect that the purchasing manager indices in the other Eurozone member states scheduled for release next week will essentially also tend weaker.

In Germany, the purchasing manager survey pointed to the sentiment barometer cooling slightly, albeit still at a very high level. The relevant composite index shed 0.8 points and thus in October came to 57.7 points. Sentiment in both manufacturing and the service sector was somewhat less buoyant. However, there was one reason to remain upbeat: The sub-component for order receipts climbed noticeably and reached the highest level since April 2011. Against this background, the dip in the overall index can be best interpreted as the index taking a little breather. In other words, nothing would seem to speak against the economic upturn persisting in Q4/2017.

Sentiment among French purchasing managers improved still further in October. The French composite index climbed 0.4 points on the prior month to reach 57.5 index points. Not only is that the highest figure since May 2011, but is also the 16th consecutive increase. Here, sentiment in both manufacturing and the service sector improved somewhat. There were above all improved figures for companies’ intentions to recruit new staff. This may already be a response to the labour-market reforms the Macron administration resolved in September. According to IHS Markit, the purchasing managers polled also reported strong demand from both inside and outside the country. The fourth quarter is thus beginning with the survey continuing to point very clearly to growth.

 

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