European PMI's in June and 2Q

June 23, 2009

Flash PMI readings for the whole euro area, Germany, and France fell below 50 in all instances, connoting a continuing contraction of activity into and including the final month of the first half of 2009. In only one case, French manufacturing, did the reading exceed expectations.  However, five of the nine June readings were higher than in May.  The matrix below tabulates the point change between PMI scores in May and June.

Point Change Euroland Germany France
Composite +0.4 -0.6 +1.1
Manufacturing +1.7 +0.9 +2.2
Services -0.3 -0.9 -0.8


A second table below, which compares the latest readings for June to quarterly averages in 2Q09 and 1Q09, suggests a loss of service-sector momentum at the end of the current quarter, as Euroland struggles to transition from deep recession to moderating recession.  Whereas second-quarter mean scores are significantly better than first-quarter readings, June service-sector scores are only similar to, not above, the second-quarter averages.  Manufacturing, by contrast, shows a continuing progression toward higher albeit sub-50 readings in June compared to 2Q averages.  Because of the drag from services, which comprise the bigger component of GDP, the composite scores in June exhibit less continuing up-drift toward 50 than do the manufacturing readings.  At the same time, services still posted higher scores than manufacturing, which previously sank very sharply in 4Q08 and 1Q09.  The recession became less intense in the second quarter, but an improvement in services must resume before positive or even zero growth can be achieved again.  That’s liable to take a few more quarters.

Composite Euroland Germany France
June 44.4 43.4 47.2
2Q09 43.2 42.5 46.0
1Q09 37.6 37.6 39.1
June 42.4 40.5 45.5
2Q09 40.0 38.5 43.0
1Q09 33.9 32.2 36.4
June 44.5 44.3 47.5
2Q09 44.4 44.4 47.4
1Q09 40.8 42.7 42.1

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.



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