Eurozone: PMIs are falling - ING

Peter Vanden Houte, Chief Economist at ING, explains that a fall in the Eurozone’s PMI in October signals a weakening of momentum at the start of the fourth quarter.

Key Quotes

“The composite flash PMI fell to a 25-month low of 52.7 from 54.1 last month, with the manufacturing PMI coming in at 52.1 (from 53.2 in September), while the Services PMI shrunk to 53.3 from 54.7.”

“Sentiment in the more internationally oriented manufacturing sector is already suffering from concerns regarding trade wars, tariffs, Brexit and an overall increase in political uncertainty. Manufacturing orders actually fell for the first time since November 2014. But the cooling is also spilling over to the services sector.”

“Employment growth continued to rise, though the pace of growth is weakening. At the same time price pressures remain important. While they are already easing somewhat in the manufacturing sector, services sector charges rose at one of the strongest rates in a decade.”

“The PMI figure is compatible with a 0.3% Quarter-on-Quarter GDP growth, a deceleration from the pace seen in the first half of the year. Thanks to base effects average GDP for this year is still likely to come out at 2.0%, but the current growth pace means that next year’s GDP growth will fall back to something close to 1.5%.”