European Manufacturing PMIs signal gloomy end to 2012 – Capital Economics
FXstreet.com (Barcelona) - Jonathon Loynes, Chief European Economist at Capital Economics notes that the renewed fall in the eurozone manufacturing PMI readings in December underlined the weakness of activity in the region at the end of last year. He feels that 2013 looks set to be another very challenging year for the single currency area.
He comments that the full release relating to the December manufacturing PMI included small downward revisions to the 'flash' indices released before the end of the year. The overall PMI, a composite of key manufacturing activity indices, was nudged down from 46.3 to 46.1, while the output index slipped from 46.1 to 46.
Loynes writes, "Both indices remain slightly above the lows seen in the autumn of last year. However, at well below the 50 level which theoretically separates expansion from contraction, they continue to point to sharp falls in industrial activity. The PMI points to annual contractions in industrial production of some 5% - a bit worse than the 4% drop seen in the year to October."
In the detailed breakdown, the new orders index remained particularly weak at just 43.5, only a touch above the lows seen last year. Further, the breakdown by country points to industrial weakness in virtually all of the major euro-zone economies. The one exception to the trend is Ireland, whose manufacturing PMI remains consistent with reasonable industrial growth.
Overall, Loynes notes that December's manufacturing PMIs supports other evidence suggesting that the eurozone economy fell further into recession in the fourth quarter and offers little hope that the industrial sector will support growth in the early part of 2013 either.
He comments that the full release relating to the December manufacturing PMI included small downward revisions to the 'flash' indices released before the end of the year. The overall PMI, a composite of key manufacturing activity indices, was nudged down from 46.3 to 46.1, while the output index slipped from 46.1 to 46.
Loynes writes, "Both indices remain slightly above the lows seen in the autumn of last year. However, at well below the 50 level which theoretically separates expansion from contraction, they continue to point to sharp falls in industrial activity. The PMI points to annual contractions in industrial production of some 5% - a bit worse than the 4% drop seen in the year to October."
In the detailed breakdown, the new orders index remained particularly weak at just 43.5, only a touch above the lows seen last year. Further, the breakdown by country points to industrial weakness in virtually all of the major euro-zone economies. The one exception to the trend is Ireland, whose manufacturing PMI remains consistent with reasonable industrial growth.
Overall, Loynes notes that December's manufacturing PMIs supports other evidence suggesting that the eurozone economy fell further into recession in the fourth quarter and offers little hope that the industrial sector will support growth in the early part of 2013 either.
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