European Flash PMIs for February were out last night and the news wasn’t great with most measures rolling over from January’s spike:
Flash Eurozone PMI Composite Output Index (1) at 47.3 (48.6 in January). Two-month low.
Flash Eurozone Services PMI Activity Index (2) at 47.3 (48.6 in January). Three-month low.
Flash Eurozone Manufacturing PMI (3) at 47.8 (47.9 in January). Two-month low.
Flash Eurozone Manufacturing PMI Output Index (4) at 47.5 (48.7 in January). Two-month low.
Data collected 12-20 February.Composite Output
Index fell to 47.3 in February from 48.6 in January, according to the flash estimate. The decline signals a steepening of the economic downturn, contrasting with the easing trend seen in the previous three months. Business activity has now declined throughout the past year-and-a-half, with the exception of a marginal increase in January last year.Despite accelerating, the rate of contraction in February remained slower than the post-crisis record seen in October, and the average drop in activity in the first quarter so far is less severe than the trend for the fourth quarter of last year.
And that is the best you can say. The internals show that only Germany has recovered at all and indeed its gap with everyone else is widening which is, to state the obvious, unsustainable:
Note that France is now leading the decline across the zone and looks headed into a pretty nasty recession. Combine this with China’s move to suppress property and my base case for a Christmas inventory cycle boost followed by a disappointing year is looking solid this morning.
