Forex Flash: Weak Eurozone PMI confirms lingering recession – ING

Share | (Barcelona) - The weak Eurozone PMI outturn for November is a major disappointment in light of the increases in the German and French PMI surveys, and suggest that that the recession on the Eurozone's periphery is gathering further pace. The lack of change in the headline composite index (45.8 versus 45.7 in October) reflected diverging movements across the main components. In a clear sign that fiscal tightening continues to take a heavy toll on domestic demand, the services PMI fell from 46.0 to a 40-month low of 45.7. The manufacturing PMI, by contrast, improved, but at 46.2 it remains in deep contraction territory.

Looking at the available country data, the French composite output index rose for a second month from 43.5 to 44.6, while the German equivalent also edged higher from 47.7 to 47.9. A flash estimate for the other Eurozone countries is not available, but the average for this group sank further into contraction territory - which arguably is the most disturbing aspect of today's report.

"All in all, today's PMI figures confirm that the Eurozone economy remains firmly stuck in recession. Looking ahead, we still think that ECB's recent actions and the improvement in the global economy (as signaled by the further pickup in the Chinese PMI) will provide some respite to the Eurozone economy. However, with the fiscal squeeze across the region continuing, any return to positive growth next year will likely be slow and gradual - and largely confined to the 'core' countries." writes Analyst Martin van Vliet at ING.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Forex and Currencies

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