Eurozone: the worst is behind us in manufacturing, but not in services – ABN AMRO

Han de Jong, Chief Economist ABN Amro, provides his view on Friday's release of the flash version of the Eurozone Manufacturing and Services PMI prints for the month of November.

• “The preliminary November manufacturing PMI for Germany rose from 42.1 to 43.8, much better than expected, although still indicating a contraction in the sector. The November reading was the highest in five months and the ‘new orders’ series registered its highest reading since January this year. That is all good news.
• The services PMI, on the other hand, eased: 51.3 versus 51.6. We have highlighted the unusual gap between the manufacturing and the services PMIs, respectively. A convergence was always likely and we have often argued that the services PMI will follow the manufacturing PMI down at some stage. The strong rise of manufacturing and the modest drop in services narrows the gap between the two.
• The French PMI data and the eurozone data show similar trends. It is noticeable though, that the eurozone numbers are weaker than the numbers for Germany and France. The manufacturing PMI is up 1.7 points in Germany, 0.9 points in France, but only 0.7 points in the eurozone. The composite PMI was up on the month in both Germany and France, but down in the eurozone as a whole. It is hard to understand how that fits together.
• Eurozone car registrations are growing rapidly on a yoy basis: 9.8% yoy in October after +14.8% in September. This sounds much better than it is, really. Car registrations collapsed last year from September on so the yoy comparison is an easy one, against a very low base. Nevertheless, there are news reports of car manufacturers hiring staff.”