Flash PMI Signals Steep Downturn in November
IHS Markit reports PMI Signals Steep Downturn in November Amid COVID Lockdowns.
Key Findings
- Flash Eurozone PMI Composite Output Index at 45.1 (50.0 in October). 6-month low.
- Flash Eurozone Services PMI Activity Index at 41.3 (46.9 in October). 6-month low.
- Flash Eurozone Manufacturing PMI Output Indexat 55.5 (58.4 in October). 4-month low.
- Flash Eurozone Manufacturing PMI at 53.6 (54.8 in October). 3-month low.
The flash IHS Markit Eurozone Composite PMI® slumped from 50.0 in October to 45.1 in November, its lowest since May. With the exceptions of the declines seen in the first two quarters of this year, the average PMI reading of 47.6 in the fourth quarter so far is the lowest since the closing quarter of 2012 (during the region’s debt crisis) and indicative of a steep decline in GDP.
The deteriorating performance was broad-based, albeit with the service sector hardest hit from virus containment measures. While manufacturing output growth merely slowed in November to the lowest since the start of the sector’s recovery back in July, attributable to a marked slowing in order book growth, service sector output fell for a third month running, with the rate of decline accelerating sharply to the fastest since May.
A near-stalling of manufacturing output growth was exacerbated by an increasingly severe drop in services activity, pushing the flash composite PMI down from 47.2 to 42.4
Employment meanwhile fell across the eurozone as
a whole for a ninth consecutive month, with the rate of job losses holding steady on the post-pandemic low seen in October.By country, employment rose in Germany for the first time since February, and France saw the lowest number of job losses since the pandemic struck. Job cuts deepened in the rest of the region as a whole, however, to the steepest since June.
Comments From Chris Williamson Markit Chief Economist
- “The eurozone economy has plunged back into a severe decline in November amid renewed efforts to quash the rising tide of COVID-19 infections. The data add to the likelihood that the euro area will see GDP contract again in the fourth quarter.
- “The service sector has once again been the hardest hit, especially consumer-facing and hospitality businesses, though weakened demand has also taken a toll on manufacturing.
- “The factory sector nevertheless remains something of a bright spot, with factories in Germany continuing to show especially encouraging resilience, led by a further surge in demand.
- “Firms across both manufacturing and services have also become more optimistic about the year ahead, largely reflecting growing hopes that the recent encouraging news on vaccines will allow life to return to normal in the new year.
- “Importantly, however, the further downturn of the economy signalled for the fourth quarter represents a major set-back to the region’s health and extends the recovery period. After a 7.4% contraction of GDP in 2020, we are expecting only a 3.7% expansion in 2021.”
If the Eurozone was not already in recession, this would signal the start of one.
Mish
The UK’s economic emergency has only just begun. No rosy picture here.
Europe is the “Ghost of Christmas Future”.
Or looks like a drowning swimmer coming up for one last breath of air.
Thats when they become dangerous, taxing foreign service providers as much as they can and becoming even more protectionist.
Don’t worry.
Biden will prioritise the Eurozone and never mention addressing assymetric tariffs. They love him.
The US has a 25% tariff on light duty trucks, so yeah maybe we should lower that.
Look the other direction vs US exports.
OH ! You DO export stuff to Europe then? Like what ?
Microsoft, Google, Amazon ?
Not a lot, tariffs too high and too many other non-tariff barriers to trade.
For a number of years I’ve disliked the protectionistic stance of the EU which has made goods from the US too expensive through tariffs.
“If the Eurozone was not already in recession, this would signal the start of one.”
I don’t like it when there’s a recession and then there’s a signal that a recession is starting….smells pretty deflationary to me.
The thing I keep wondering is…..if (big if) the COVID vaccine works well, and we get to some kind of semblance of normal commerce by next summer, with the damage of an entire year of COVID related GDP losses just about everywhere…can the world shrug it off and pick up where we were in late 2019?
My guess is that it’ll take years…..and some sectors might not ever come back. Transportation being a major question mark…..brick and mortar retail another.
My guess is that hospitality will come back. Their business model is resilient…..not sure about hotels and alternatives like AirBnB…..
I suspect that the whole western world has been in a deflationary situation since 2008. But for central banks trying to hide the situation and politicians telling you otherwise. Chickens got to come home to roost sometime.
It takes about 28 days of consistent behaviour change to form new habits. Some of the new habits formed under duress in 2020 will be here a long time.
At the end of the pandemic the economy will have moved 10 years into the future, and not in a good way for employment.
A lot of the people discarded in the WFH movement will never be back.
WFH has the advantage of possibly being anywhere and the disadvantage of possbly being anywhere. Who needs a H1b visa for a work-life on line?
Why maintain as much physical space in terms of office?
The real penetration of Zoom into the business travel market is pretty deep–all of the associated elements of the traveller can be seen as extraneous to conducting business.
Creative destruction at its finest. New jobs will be created as the old ones go away.
Well … you know … Eurozone, centre-left, neoliberal, mask-wearing, knee taking, wet bunch of non-entities. Thank God we left. You now know what to expect in the good old US of … Hillaryious!!!!
You do know the UK cratered as well, right?
Obama’s team is back and this time with a shaky majority in the House, no majority in the Senate and a conservative-leaning Court. Since it looks fragile with midterms in two years and with the same group in power (the Coasts) the looting will have to be accelerated to fit within that period hence Yellen at the Fed. She there to bypass Congress and shovel the money directly to their donors. Could I be a bit cynical?
“Could I be a bit cynical?”
No but you could be more coherent.
So you agree! You just want me to be more eloquent in my choice of words, more rhyme in my sentence structure and ending with a politically correct slant. I can do that.
Oh yes, Lance. I agree. We have a centre-left, neoliberal, mask-wearing, knee-taking wet bunch of non-entities currently in charge … as typified by Boris. But unlike in the EU, and I suspect the USA (thanks to your voting machinations) at least we can vote the bastards out of office. And will do!
Well, the US is going to crater in Dec, probably negative GDP for the 4th quarter. Luckily we voted the bastard out, so looking for ’21 to be a stellar year. Unfortunately given the P/E of the current market, don’t know how much growth in equities to expect.
Crater as in what size of crater. You have the ten foot variety up to the five hundred mile variety. Which size are you referring to so I can figure out what you mean by an economy cratering. I would prefer that you be more precise.
It has to be stellar looking at the abandoned millions. Nothing less will make even a dent in the unemployment numbers.
If I were looking to buy gold, I think I might be tempted in this range. The bitcoin whales are dumping gold to go all in on cryptos I think. No bottom yet, but it probably will when they take profits.
The trend in gold doesn’t look too inspiring but then again I was never much into gold as an asset so what do I know.
Not for a trade….no trend….just a reasonable assumption that gold has plenty of reasons to stay fairly strong…and I see a reason it’s dumping. I’m not buying. But I might if I come into some cash from other sources. I have a possible minor windfall coming….not a sure thing. lol.
So….the BTC whales are all goldbugs if you scratch the surface….they have a trading strategy that has worked well for them. They manipulate bitcoin markets to trigger buy signals that bring in a lot of speculators….and when the time is right they sell the BTC hard, drive it down, and buy more….do it again…….wash rinse and repeat, until the rally starts to fade…then they buy gold and wait.
Physical gold has storage costs, crytos don’t which is an advantage so crytos could supplant physical gold.
Bitcoin is the problem with crypto……it is perceived as a store of value, but there are several real problems with it that make it useless for anything else….and it is concentrated in the hands of the “miners” who are accidental billionaires…and in the hands of other accidental billionaires….. who are able to make the price go anywhere they want (within limits), any day they want…..so far, anyway…not enough regulation to prevent blatant market manipulation. Wild Wild West. Bucket shops.
Bitcoin mining uses more electricity every year than a small country…..which makes mining ultimately an unsustainable practice.
Other cryptos stand to be much more useful in the long run than BTC…but it completely drives the whole crypto market.
The long run looks to be…..central banks use their own internal cryptos, treasuries of sovereign countries all create their own sovereign cryptos based on their own existing fiat currency, and governments make BTC and the private cryptos all illegal.
Bitcoin itself might somehow survive…..too many rich people own it now for it to die suddenly…..not sure what becomes of it……but it is no investment….just another highly speculative asset at this time. But some of my best mentors are looking to get rich(er) off it, and they probably will.
I have dabbled in crypto for a while, but I’m not flush enough to pay that kind of roulette at the moment.
“play that kind of roulette” (pay that kind of roulette being a perfect Freudian slip…not sure if it was me or autocorrect)
Eddie, Bitcoin is just the first crypto. The important crytos are the ones that are already tied to banks or central banks of those who soon will be. I see cryptos as like gold but can be carried on a USB stick or something like. The value of gold is just an idea but it is an idea that has some big drawbacks, notably it’s big and heavy and has to be assayed in every transaction. Crypto cuts through all that. When it first came out I was very sceptical but my younger relations were not. Guess who made money and who did not.
Look at the 10-year Gold chart.
It is in the final stage of completing a decade long cup-and-handle formation.
The handle could drop as low as $1,700.
And then……
Have trouble with bitcoin, reminds me of the tulip mania of several centuries ago. Very interesting construct though I’m not a good enough trader to gamble in that space.
The Conference Board’s consumer confidence index numbers for November are more important I think.
Comments on the strength of the Euro?
Carry trades still unwinding? Or what. No skin in the game on that, personally.
Dollar weaker Euro stronger
Of course they are in recession, and the Great Reset nutjobs, which you support or are oblivious of, will make sure they kill the remaining small businesses. The WEF state goals say “you will own nothing, and love it”, and the US will hand over its power to the UN.