The Flash PMI report for Europe — an index based on a survey of manufacturing and service companies — looks awful.
The composite index (which blends manufacturing and services) has fallen to a 40-month low.
The Eurozone sank further into decline at the start of the fourth quarter, with the combined output of the manufacturing and service sectors dropping at the fastest rate since June 2009. The Markit Eurozone PMI® Composite Output Index fell for a third successive month, down from 46.1 in September to 45.8 in October, according to the preliminary ‘flash’ reading based on around 85% of usual monthly replies. Output has fallen continually since September of last year with the exception of a marginal increase in January. Output continued to fall in response to a further marked contraction in new orders. The rate of decline in new business eased slightly since September, which had seen the largest drop since June 2009.
This news is bringing a general damper to markets today, which are red across the board in Europe, continuing a multi-day trend.
Also not helping was a very week Germany survey of business confidence.
Bloomberg’s Mike Mckee summarizes that one:
#Germany‘s Ifo business confidence index falls to 100.0, a 2.5-year low. Current assessment falls to 107.3 from 110.3. Expectations 93.2.
— Michael McKee (@mckonomy) October 24, 2012
The bottom line is that Europe might not quite be ready to join the global Green Shoot parade that everyone is talking about.