CHART OF THE WEEK
September’s Flash Eurozone Composite PMI slipped slightly from 54.5 to 54.2, taking it 0.1 point below its July level. This relative stability hides significant sectoral disparities with manufacturing continuing to fall and, at 53.3, now at its lowest level since September 2016. Meanwhile, the service sector has risen for the second straight month to reach 54.7. At current readings, these indicators are higher than the levels that prevailed from end-2013 to end-2016 and in line with growth of around 2.0%.
OUR ANALYSIS
At 1.5% on average over the first half of 2018, growth fell short of expectations and was lower than the level implied by previous PMI index readings. The stability of the composite PMI above the 54 level raised hopes of a rebound to 2%. However, somewhat disappointing industrial output data and softer retail sales are casting doubt over the Q3 figure. August’s releases will be closely scrutinised for confirmation, or not, of a rebound.
The opinion expressed above is dated 28 September 2018 and is liable to change.
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