Some PMIs went up, but the eurozone is still headed for recession | FT Alphaville

Some PMIs went up, but the eurozone is still headed for recession

Look into my eyes. You are feeling very positive about the economy. Things will go well. You are thinking things have improved. You are probably French and only focusing on the most recent observation in the Markit’s Flash PMI released on Thursday morning that hit a six-month high:

Or maybe you are from a eurozone country and there is so much awful news that when any economic indicator manages to go up, even by 0.1 like the Flash Eurozone Composite PMI did from July to August, it is cause for a (muted) celebration (in keeping with this time of austerity).

Look! Even if the eurozone as a whole managed to not err… contract even more… and pretend that blue line doesn’t exist. It’s only Germany at a 38-month low. Erm.

Alright, fine, we give up. Here are a bunch of headlines from economists that roughly amount to ‘these economic indicators were showing increasing bad things and it’s still doing that, but the rate of increase of badness is a bit less for some.’

Tim Moore at Markit:

German private sector output falls at faster rate during August. Renewed services contraction offsets slower drop in manufacturing activity.

Jack Kennedy, also of Markit:

French private sector output falls at slower pace in August

Press release of the Flash PMI for the eurozone*:

Downturn in Eurozone economy extends into seventh month

Over to Gustavo Bagattini at RBC Capital Markets for the bigger picture (emphasis ours):

The ‘flash’ PMIs for August confirmed the signal from last month’s data – the euro area is headed for a technical recession. In isolation, we continue to estimate the PMIs to be consistent with a decline in euro area GDP of around 0.5% q/q in the three months to August (which could make Q3 the worst quarter since Q1/09),…

Our attempt at hypnosis must have worked a bit though (and/or Bagattini was looking at the same data as we were):

The headline indices all remain firmly in contractionary territory, with an improvement in manufacturing balanced by deterioration in the headline services balance. There were small signs of encouragement: the manufacturing PMI improved by over 2pts in Germany and France, and the French surveys improved across the board for the third straight month.


* From Markit’s press release of the eurozone flash: “National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland.”

Related links:
Eurozone PMI data ‘points to new recession’ – BBC
Euro zone flash PMIs signal recession – Reuters
Euro zone? euro zone? eurozone? Eurozone? –
Euro zone, eurozone euro zone, Euro zone –
Debt crisis: eurozone headed for recession as economic rot spreads – The Telegraph
“Always look on the bright side of life” – YouTube