EMU PMIs ‘Stabilize’ at Weak Levels

The S&P flash PMIs for the composite manufacturing and services sectors for the September readings show a stronger Germany, leading to a stronger reading in the European Monetary Union in the composite. Meanwhile, France, the United Kingdom, Japan, and the United States, all report weaker composite readings for September.

Composites are broadly weaker- Germany’s strengthening is in the composite as well as for manufacturing and services separately. This helps to push the services sector in the EMU to a stronger reading although the EMU manufacturing reading is weaker month-to-month. France shows weaker readings in the composite as well as for both manufacturing and services. Japan follows suit on that score. The U.S. and the U.K. each report a weaker composite driven by a weaker service sector that dominates a somewhat stronger manufacturing sector in both the U.S and in the U.K.

Only two composites show net expansion underway- Only the U.S. and Japan have composite PMI readings above 50 in September, indicating expansion. And the only sector readings with PMI values above 50 are for services in the U.S. and in Japan, as well.

Sequential trends- The sequential readings from 12-months to 6-months to 3-months show weakening for the composite and for both sectors in the EMU, in Germany, in France, in the United Kingdom, and in Japan. The exception is the U.S. that is stronger on balance over 3 months for the composite and for the services sector. Comparing the 6-month PMI averages to the 12-month averages, conditions are broadly stronger across sectors and the composites. The exception is France that weakens on all three metrics. The U.S. and Japan strengthen on all three metrics, while the U.K. Germany, and the EMU strengthen on their services measures which dominate the composite, making it stronger over 6 months compared to 12 months. Comparing the 12-month readings to 12-months ago, everything is weaker except for services and the composite in Japan.

Evaluation of PMI levels- The queue percentile standings rarely change much month-to-month and across these metrics we continue to see queue standings well below their neutral, 50% mark, generally below the 20% mark for most countries, across most sectors, with the sole exception being Japan that has the service sector reading at its 81st percentile; that helps the composite to a 75.5 percentile standing. However, despite month-to-month changes and broader trends in the sequential numbers, it's clear that the PMI values being posted are extremely weak.

Net 3-month changes- The final column of the table shows the net changes over 3 months; over three months these are overpoweringly weak. They're negative numbers for all the countries and all the sectors with the sole exception of manufacturing in the United States. The last 3 months have been weak.

On balance: The bottom line for the S&P flash numbers for September is that weak conditions continue to prevail and to dominate. There is some rebound in Germany that helps the European Monetary Union to post an uneven rebound, but the levels of activity indicated by the composite, the manufacturing sector and the services sector continue to be extremely weak.