Germany Private Sector Output Declines First Time Since November; Eurozone Activity Declines 19th Time in 20 Months
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As expected in this corner, the Markit Flash Germany PMI® shows German private sector output declines for first time since November 2012.
Key Points:Eurozone Activity Declines 19th Time in 20 Months
- Flash Germany Composite Output Index(1) at 48.8 (50.6 in March), 6-month low.
- Flash Germany Services Activity Index(2) at 49.2 (50.9 in March), 6-month low.
- Flash Germany Manufacturing PMI(3) at 47.9 (49.0 in March), 4-month low.
- Flash Germany Manufacturing Output Index(4) at 47.9 (50.0 in March), 4-month low.
PMI vs. GDP
Lower levels of private sector business activity reflected a decrease in new order volumes for the second successive month during April. The overall pace of contraction was the steepest since October 2012, largely driven by a marked decrease in new work received by service providers. Manufacturing new orders dropped at the fastest pace so far this year but, in contrast to the service sector, the rate of new business decline remained slower than on average in 2012. In the manufacturing sector, new export orders declined at the most marked pace so far in 2013, but the rate of contraction was slightly slower than seen for overall new work.
April data suggested a general lack of pressure on operating capacity in the German private sector, as backlogs of work decreased for the twenty-second month running. The current period of declining work-in-hand but not yet completed) is the longest since this series began over 10 years ago.
The Markit Flash Eurozone PMI® shows Eurozone suffers ongoing downturn in April.
Key Points:Wishin' and Hopin'
- Flash Eurozone PMI Composite Output Index at 46.5 (46.5 in March).
- Flash Eurozone Services PMI Activity Index at 46.6 (46.4 in March). Two-month high.
- Flash Eurozone Manufacturing PMI at 46.5 (46.8 in March). Four-month low.
- Flash Eurozone Manufacturing PMI Output Index at 46.3 (46.7 in March). Four-month low.
GDP vs. PMI
The Markit Eurozone PMI® Composite Output Index was unchanged on March’s reading of 46.5
in April, according to the flash estimate. The sub-50 reading indicated a drop in activity for the nineteenth time in the past 20 months, the exception being a marginal increase in January
Activity fell sharply again in both manufacturing and services. While the former saw the steepest rate of decline for four months, the latter saw the downturn ease slightly compared with March.
New business fell for the twenty-first successive month, with the rate of deterioration accelerating for the third month in a row to signal the steepest decline since December. Marked falls were seen in both manufacturing and services.
The ongoing deterioration in the order book pipeline prompted firms to cut payroll numbers for the sixteenth month running. The rate of job losses accelerated slightly on March, reflecting stronger rates of job shedding in both manufacturing and services.
Those wishing and hoping that Germany was going to remain divergent from the rest of the eurozone can now safely toss that notion on the scrapheap of foolish ideas.
As I have been saying, at some point Germany will start a steep acceleration of the overall eurozone recession. That time may be at hand now.
Mike "Mish" Shedlock