Manufacturers around the world have confirmed that economic activity is slowing down everywhere.
The November preliminary purchasing managers index, or PMI, reports all reflect either deceleration or outright contraction of activity across Europe. (Note: A PMI above 50 signals grow. Anything below 50 signals contraction.)
- The Eurozone’s composite PMI fell to 51.4, down from 52.1 in October.
- France’s manufacturing PMI dropped to 47.6 in November, down from 48.5 in October.
- Germany’s manufacturing PMI dropped to 50.0 in November, down from 51.4 in October.
“In one line: Still miserable outlook in France,” Pantheon Macroeconomics’ Claus Vistesen said.
“The single currency area is struggling to eke out any growth, with the PMI indicating that GDP is likely to have risen by just 0.1-0.2% in the fourth quarter,” Markit’s Chris Williamson said. “A drop in new orders for the first time in almost one-and-a-half years, albeit only very marginal, suggests growth could slow further in December.”
“France remains a key concern, with business activity falling for a seventh successive month and demand for goods and services deteriorating at a faster rate. Growth in Germany has meanwhile slowed to the weakest since the summer of last year, with demand stagnating,” he added.
And things weren’t any better for Asia.
- China’s PMI fell to 50.0 in November, down from 50.4 in October.
- Japan’s PMI fell more than expected to 52.1 in November, down from 52.4 in October.
Economists have been worried about China’s slowing growth for some time. And now that the latest PMI data dropped to a six month low, they’re even more uncertain about China’s future.
“Disinflationary pressures remain strong and the labour market showed further signs of weakening,” HSBC’s Hongbin Qu said. “Weak price pressures and low capacity utilization point to insufficient demand in the economy… Furthermore, we still see uncertainties in the months ahead from the property market and on the export front. We think growth still faces significant downward pressures.”
Chinese policymakers could respond with some sort of easing of policy on top of the stimulus that’s already out there.
“The data are consistent with our view that growth faces downside risks, but not a collapse,” Barclays’ Jian Chang said. “We think the government’s accelerated efforts to boost infrastructure investment and ease financing constraints will prevent a collapse of investment and activity in the near term, an increasing concern of many investors.”
US PMI reports will be released later today.
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