Purchasing managers‘ sentiment in the euro area knows no bounds

 

Sentiment among European purchasing managers had already been very good in the previous few months and in November it improved again. The sentiment barometers rose again in manufacturing industry as well as in the service sector. According to the preliminary results, capacity bottlenecks in both sectors are leading to increased job creation, which in November was stronger than it has been at any time since 2000. Thus the economic upswing is becoming increasingly broad based.

The composite index for the euro area rose from 56.0 to 57.5 index points. This is the highest level for 79 months! Across the board, the purchasing managers take a very positive view of the orders situation, production and hiring intentions, especially for the economic heavyweights Germany and France.

The survey findings indicate that the momentum of growth is also likely to stay strong in Germany in the final quarter. The lights are green for production, orders and employment. In manufacturing industry the sentiment barometer climbed by 1.9 ticks and on the basis of the preliminary data reached 62.5 index points. This is the highest figure for 81 months. The index for the service sector also improved, but only slightly by 0.2 points to reach a level of 54.9 points. Overall, the pressure on existing capacity is increasing. With purchase prices rising at the same time and given the increasing demand, the purchasing managers reported a steeper increase in selling prices than has been seen for over six and a half years.

Sentiment among French purchasing managers improved exceptionally strongly again in November. The relevant composite index was up 2.7 ticks month-on-month and is currently at 60.1 index points. This is the highest level since May 2011. The index edged up again in manufacturing industry, but above all also in the service sector. In both sub-segments of the economy the polled purchasing managers took a downright euphoric view of the orders situation and production. According to information provided by IHS Markit, hiring intentions also improved for the thirteenth consecutive month. This sub-index even reached its highest level since 2001. So towards the middle of the fourth quarter the signals for the French economy are clearly continuing to point towards growth.

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