Fra ABNamro :
Euro Macro: Composite PMI falls to stagnation levels in September – The eurozone composite PMI staged its second consecutive monthly decline in September. It fell to 50.1, down from 51.9 in August. The composite index, which tracks GDP growth relatively well, is a weighted average of the manufacturing PMI output index and the services sector PMI.
The decline in the composite index in September, was totally due to a drop in the services sector PMI (to 47.6, down from 50.5 in August), which more than offset strength in manufacturing (the PMI rose to 53.7 from 51.7).
The divergence between the services and the manufacturing PMIs illustrates that activity in the (largely internationally-orientated) industrial sector continues to pick up slowly, which is in line with a gradual recovery in global trade, whereas the (largely domestically-orientated) services sector is contracting on the back of weak domestic demand.
Indeed, we expect that domestic demand in the eurozone will contract in the coming quarters on the back of a sharp deterioration of the labour market and corporate retrenchment. The details of the PMI report also underlines this view, with the employment component of the composite PMI (47.5 in September) remaining at levels consistent with ongoing declines in employment.
Moreover, the forward looking component of the services sector PMI (new business) also dropped in September (to 47.8, down from 49.8 in August). All in all, the PMI report seems to be in line with our double dip scenario for the eurozone economy, with GDP contracting modestly in the final quarter of this year, following a sharp technical rebound in growth in the third quarter.
