No Joy in European Manufacturing PMI Levels

There are some long faces in the European Union these days as the latest Purchasing Managers’ Index numbers show that there has been virtually no gain in terms of manufacturing data. If there is any good news, it is that the PMI data didn’t get appreciably worse, but there had been some hope that last month’s gain would be built on this month.

Current levels leave little room for dealing with setbacks later this year. The gains were also uneven between the various members of the euro zone, a pattern that has become very familiar of late. The German economy continues to hold its own, but France is sinking even faster than before, and Italy has had its worst reading in over a year.

The reason for the decline is both easy to identify and complex. There has yet to be a surge in consumer confidence, and that is not shocking to anyone. The threats to the regional economy have not abated and news that unnerves the investor, the business community and the consumer occurs frequently.

Moreover, this round of PMI data doesn’t even reflect the impact of the escalation of tension in the Eastern Ukraine dispute with Russian separatists following the infamous shooting down of a commercial airliner there -- most assume that the real impact will be felt next month. And there is a sense now that Europe may suffer more from the new sanctions than Russia, at least in the short term, if the Russians restrict the release of gas/oil products that many European countries are dependent upon during winter months.

On top of those concerns, its export destination are not providing as much of a light at the end of the tunnel as was expected. The US is more insular than ever and is not growing at its traditionally fast level, China is just now starting to get its growth engine started, but the expectation is for not for growth it has posted in recent years, and the key emerging market states that seemed so promising a few years ago are all locked in their own economic malaise.

- Armada Corporate Intelligence
Check out this week's edition of eNews for more are Markit Economic's roundup of PMI data for the latest period. eNews is available each week late Thursday afternoon at www.nacm.org and via email. 

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