PMI manufacturing
indices for August released today strengthened the view that Euro zone economy
could extend the rebound started in Q2 – when GDP rose by 0.3% q/q – in H2 ’13.
Euro zone PMI manufacturing index rose from 50.3 to 51.4, above an estimate of 51.3 published on Aug. 22. A
reading above 50 indicates growth.
Euro zone
figure is in line with a slight recovery in Q3 and Q4. Economic activity could
improve in the quarters ahead but the risk of a return to recession in case of
negative shocks are still very high, in our view.
Indices
were above 50 in all major Euro zone countries, with the exception of France:
1) German PMI rose from 50.7 to 51.8
(flash estimate 52.0). The revision in Germany does not seem meaningful. The
trend remains positive and industrial
production is expected to continue growing in the months ahead despite market
expectations for a correction of orders and output in July (data are due during
the week);
2) French PMI remained unchanged at 49.7.
French data could increase concern on the recovery there. However, INSEE index
for August rose more than expected, giving an opposite message compared to the
PMI index. French outlook is still worrisome as competiveness is low and public
finance continue to deteriorate;
3) Italian PMI rose from 50.4 to 51.3 –
the 27 month high of the index;
PMI indices
also rose in Netherlands - from 50.8 to 53.5 – and in Spain – from 49.8 to
51.1. In Europe, UK PMI manufacturing index climbed from 54.8 to 57.2.
Positive news
also came from China, where PMI manufacturing index was at 51.0 against market
expectations at 50.6.
However,
the picture in the emerging Asia ex-China was less positive, with indices below
50 - signalling contraction for the sector - in South Korea, India, and
Indonesia.
