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Published by Belinda Winkelman

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Published by: Belinda Winkelman on Feb 21, 2013
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08/03/2013

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Page 1 of 4
 
©Markit Economics Limited 2013
 
News Release
Purchasing Managers’ Index
 ® 
 MARKET SENSITIVE INFORMATION
EMBARGOED UNTIL: 0900 (UK Time) 21 February 2013
Markit Flash Eurozone PMI
®
 
Eurozone PMI signals steepening downturn in February
 Flash Eurozone PMI Composite Output Index
(1)
at47.3 (48.6 in January). Two-month low.
 Flash Eurozone Services PMI Activity Index
(2)
at47.3 (48.6 in January). Three-month low.
 Flash Eurozone Manufacturing PMI
(3)
at 47.8(47.9 in January). Two-month low.
 Flash Eurozone Manufacturing PMI Output Index
(4)
 at 47.5 (48.7 in January). Two-month low.
Data collected 12-20 February.
 The
Markit Eurozone PMI
 ® 
Composite OutputIndex
fell to 47.3 in February from 48.6 in January,according to the flash estimate. The decline signalsa steepening of the economic downturn, contrastingwith the easing trend seen in the previous threemonths. Business activity has now declinedthroughout the past year-and-a-half, with theexception of a marginal increase in January lastyear.Despite accelerating, the rate of contraction inFebruary remained slower than the post-crisisrecord seen in October, and the average drop inactivity in the first quarter so far is less severe thanthe trend for the fourth quarter of last year.
Markit (Flash) Eurozone PMI and GDP
3035404550556065
       1        9        9        9        2        0        0        0        2        0        0       1        2        0        0        2        2        0        0        3        2        0        0       4        2        0        0       5        2        0        0        6        2        0        0       7        2        0        0        8        2        0        0        9        2        0       1        0        2        0       1       1        2        0       1        2        2        0       1        3
-3.0-2.0-1.00.01.02.0
PMIGDP
PMI Output Index, sa, 50 =no change
Source: Markit, Eurostat. GDP = gross domestic product
GDP, %q/q
 
Output fell at faster rates in both manufacturing andservices, though trends were once again markedlydifferent by country. Output rose for the third monthrunning in Germany, albeit at a slower rate,contrasting with accelerating, steep rates of declinein both France and across the rest of the Eurozoneon average. French businesses were particularlyweak, reporting the largest monthly drop in outputsince March 2009.Outside of France and Germany, the rate of declinewas the fastest for three months, though it wasweaker than the downturn seen in France.
Core v. Periphery PMI Output Indices
203040506070
       1        9        9        9        2        0        0        0        2        0        0       1        2        0        0        2        2        0        0        3        2        0        0       4        2        0        0       5        2        0        0        6        2        0        0       7        2        0        0        8        2        0        0        9        2        0       1        0        2        0       1       1        2        0       1        2        2        0       1        3
GermanyFranceRest of Eurozone
Composite Output, sa, 50 =no change on previous month
Source: Markit
 
Order books and employment
New orders fell for the nineteenth month running,with the rate of decline gathering pace havingeased to the weakest for 11 months in January.However, the overall rate of loss in Februaryremained less steep than that seen throughoutmuch of 2012.An easing in the rate of loss of manufacturing neworders (to the weakest for 20 months) helped tolessen the impact of a faster decline in newbusiness at service providers. The divergencereflected the greater exposure of services to weakdomestic demand, while manufacturers benefittedfrom the first increase in new export orders since June 2011 as demand picked up in markets suchas Asia and the US. The upturn in exports was ledby Germany, while France registered a slowerdecline and the rest of the region saw a marginalincrease on average.
 
 
Page 2 of 4
 
©Markit Economics Limited 2013
 
Employment fell for the fourteenth successivemonth, although the rate of job cutting easedcompared with January (which had seen the largestdrop since December 2009). Rates of job sheddingeased in both Germany and France, butaccelerated across the rest of the region onaverage.
Core v. Periphery PMI Employment Indices
203040506070
       1        9        9        9        2        0        0        0        2        0        0       1        2        0        0        2        2        0        0        3        2        0        0       4        2        0        0       5        2        0        0        6        2        0        0       7        2        0        0        8        2        0        0        9        2        0       1        0        2        0       1       1        2        0       1        2        2        0       1        3
GermanyFranceRest of Eurozone
Composite Employment sa, 50 =no change on previous month
Source: Markit
 
Prices
Average input costs rose across the region, thoughat the slowest rate since last July. This was largelydue to the first drop in manufacturers’ raw materialprices in six months. Average selling pricesmeanwhile continued to fall, albeit to the weakestextent since last May. The narrowing of thedifferential between input cost inflation and outputprice deflation suggested that pressure on profitmargins eased slightly.
Future expectations
Looking ahead, service sector businessexpectations for the coming year fell back from Januarys eight-month high. German firms buckedthe trend, however, seeing optimism reach a 20-month record.Meanwhile, the forward-looking manufacturing neworders-to-inventories ratio rose to its highest sincemid-2011, suggesting that increasing numbers of firms will seek to raise production in March.Commenting on the flash PMI data,
ChrisWilliamson, Chief Economist at Markit
said:
“A steepening rate of decline in February is adisappointment, and suggests that the eurozone ison course to contract for a fourth consecutivequarter in the first three months of the year.“However, despite the fall in the PMI, the firstquarter decline in the economy should be lesssevere than the 0.6% drop in GDP seen in the finalquarter of 2012, with a contraction of 0.2-0.3%looking likely.“Digging into the data shows increasing schismswithin the eurozone. National divergences betweenFrance and Germany have widened so far this year to the worst seen since the survey began in 1998.Germany is on course to grow in the first quarter,recovering from the 0.6% GDP fall seen in thefourth quarter, possibly expanding by as much as0.4%. In contrast, Frances’s downturn is likely todeepen, bringing the euro area’s second-largestmember more in line with the periphery than withthe now solitary-looking German ‘core’.”
-Ends-
 
 
Page 3 of 4
 
©Markit Economics Limited 2013
 Summary of February data
 
 
Output
 
Composite Output falls for thirteenthmonth running, and at faster pace (47.3).
Services Activity falls at fastest ratesince November.Manufacturing Output falls at strongest ratesince December.
New Orders
 
Composite New business declines for nineteenth successivemonth.
Services New business falls foreighteenth successive month.Manufacturing New orders fall at weakest ratesince June 2011.
Backlogs of Work
 
Composite Faster decline in backlogs.
Services Sharpest fall in 43 months.Manufacturing Backlogs fall at slowest rate in19 months.
Employment
 
Composite Jobs decline for fourteenthconsecutive month.
Services Employment declines at robustpace.Manufacturing Jobs shed for thirteenthsuccessive month.
Input Prices
 
Composite Input price inflation at seven-month low.
Services Input price inflation at seven-month low.Manufacturing Input prices fall for first time insix months.
Output Prices
 
Composite Output prices fall for eleventh month running.
Services Weakest fall in charges in ninemonths.Manufacturing Charges fall for eighth time innine months.
PMI
(3)
Manufacturing PMI below 50.0 for nineteenthmonth running, at 47.8.
Output
3035404550556065CompositeManufacturingServicesEurozone PMIs - Output
 
New business
253035404550556065
1998199920002001200220032004200520062007200820092010201120122013
CompositeManufacturingServicesEurozone PMIs - New Business
 
Employment
3035404550556065
1998199920002001200220032004200520062007200820092010201120122013
CompositeManufacturingServicesEurozone PMIs - Employment
 
Input prices
2030405060708090
1998199920002001200220032004200520062007200820092010201120122013
CompositeManufacturingServicesEurozone PMIs - Input Prices
 
Output prices
3035404550556065
1998199920002001200220032004200520062007200820092010201120122013
CompositeManufacturingServicesEurozone PMIs - Output Prices
 
Source: Markit.

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