The composite PMI for industry and services in the eurozone slipped marginally in September to 53.9 points. However, the current level is above the average for the first half of the year and the third-quarter average is the highest for four years. The PMI increase in France could not offset the declines in Germany and other countries covered by the survey (however, the PMI level in France remains below that in the other countries).
The German composite index dipped slightly to 54.3 points in September, but is still up on the July reading. Both the industrial and services sectors contributed to this minor setback. By contrast, new orders were up, including orders from abroad. Job creation also continued. Overall, the German economy thus still seems to be in good form and in our view is heading for economic growth of 1.8% this year.
In France the purchasing managers’ index for the private sector improved markedly to 51.4 points. Alongside the stronger performance in the services sector, it is particularly encouraging that the PMI for the industrial sector is now back above the 50-point mark. However, in contrast to Germany, jobs growth in France is still below par. With GDP growth of 1.2% this year, we still see France underperforming the eurozone average.
In our view, today’s survey results are in line with our 2015 GDP forecast for the eurozone of 1.5%. We are of the opinion that the eurozone economy does not need any additional monetary policy support. The economy is receiving adequate stimulus from the existing ECB measures, the lower euro exchange rate, the drop in the oil price and less restrictive fiscal policy. With the economy gathering momentum, inflation will also pick up again in 2016. It is to be hoped that ECB officials, with their current rhetoric, do not fuel market expectations that they ultimately feel obliged to fulfil.