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© Markit Economics Limited 2012
 
News Release
Purchasing Managers’ Index
®
 MARKET SENSITIVE INFORMATION
EMBARGOED UNTIL: 0900 (UK Time) 20 September 2012
Markit Flash Eurozone PMI
®
 
Eurozone sees steepest contraction since June 2009 despite downturn easing in Germany
 Flash Eurozone PMI Composite Output Index
(1)
 at 45.9 (46.3 in August). 39-month low.
 Flash Eurozone Services PMI Activity Index
(2)
 at 46.0 (47.2 in August). 38-month low.
 Flash Eurozone Manufacturing PMI
(3)
 at 46.0 (45.1 in August). Six-month high.
 Flash Eurozone Manufacturing PMI Output Index
(4)
 at 45.5 (44.4 in August). Five-month high.
Data collected 12-19 September.
The
Markit Eurozone PMI
®
 Composite Output Index
 fell from 46.3 in August to 45.9 in September, according to the preliminary ‘flash’ reading, based on around 85% of usual monthly replies. The index therefore signalled that the private sector economy contracted for the twelfth time in the past 13 months, with the rate of decline accelerating slightly to reach the fastest since June 2009. The September reading rounds of the weakest quarter since the second quarter of 2009, with the average PMI reading for the third quarter at 46.2, down from an average of 46.4 in the second quarter.
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
-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
 
Manufacturing and services saw similarly steep rates of decline in September. However, while manufacturing output fell at the slowest rate since  April, the service sector saw the largest drop in activity since July 2009. The faster rate of decline in output reflected an accelerated rate of loss of new business – the largest monthly fall since May 2009. Manufacturing and services saw identical, steep rates of contraction, with the decline in services the largest since June 2009. Manufacturers reported a drop of marginally greater magnitude than in August, though new export orders fell at a slightly slower rate.
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
GermanyFranceRest of Eurozone
Composite Output, sa, 50 = no change on previous month
Source: Markit
 
The falls in production and new orders were widespread across the single currency area, although a divergence was seen among the region’s two largest economies. France saw output and new orders both fall at the fastest rates since April 2009, with rates of decline accelerating markedly in both manufacturing and services. Germany meanwhile saw the rate at which output fell ease substantially to show only a modest decline, and the weakest since output began contracting in May. The rate of loss of new orders also eased. Services even saw a marginal upturn in activity for the first time since May, though the manufacturing sector continued to contract, led by a further sharp fall in new export
 
 
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© Markit Economics Limited 2012
 
orders. Outside of France and Germany, the region saw output fall at the steepest rate since May 2009, with the rate of loss of new orders also accelerating. Employment fell for the ninth consecutive month across the Eurozone, dropping at the fastest rate since January 2010. The rate of job losses in services was the highest since November 2009 and steeper than the cut seen in manufacturing, which was the lowest for five months. While only a marginal fall in employment was seen in Germany, French payroll numbers were cut at the fastest rate since November 2009, and elsewhere across the region employment showed the largest monthly fall since July 2009.
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
GermanyFranceRest of Eurozone
Composite Employment sa, 50 = no change on previous month
Source: Markit
Backlogs of orders fell across the region at the fastest rate since July 2009, falling at stronger rates in both manufacturing and services and suggesting employers may seek further job cuts in October unless demand revives. Service providers’ views on the 12-month outlook also deteriorated, becoming the most downbeat since March 2009. Steep falls in confidence were seen in both Germany and France, with a further deterioration also seen across the rest of the region as a whole. The September surveys also found an increase in price pressures. Input costs rose that the fastest rate since April, driven higher by rising oil, fuel and food prices in particular. Manufacturers’ input costs and selling prices both rose for the first time in four months. However, although input costs in the service sector showed the largest rise for six months, prices charged fell at the fastest rate since February 2010, attributable to the weakness of demand. Commenting on the flash PMI data,
Chris Williamson, Chief Economist at Markit
 said:
“The Eurozone downturn gathered further momentum in September, suggesting that the region suffered the worst quarter for three years. The flash PMI is consistent with GDP contracting by 0.6% in the third quarter and sending the region back into a technical recession. ”We had hoped that the news regarding the ECB’s intervention to alleviate the debt crisis would have lifted business confidence, but instead sentiment appears to have taken a turn for the worse, with businesses the most gloomy since early-2009 due to ongoing headwinds from slower global growth. This gloom is clearly reflected in headcounts falling at the fastest rate since January 2010 as companies seek to adjust to weaker demand. “At the same time, input costs have risen markedly, linked largely to higher oil prices. Weak demand has meant companies have been unable to pass these costs on to customers, meaning output prices fell again in September. The combination of higher costs and lower selling prices will inevitably hit profit margins. “Some good news came from an easing in the rate of contraction in Germany, though the rate of decline accelerated markedly in France and a deepening downturn was also evident in the periphery. It remains too early to say, however, whether Germany will continue to buck the trend, especially as it continued to see a strong rate of loss of new orders in both manufacturing and services.”
-Ends-
 
 
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© Markit Economics Limited 2012
 Summary of September data
 
Output
 
Composite Output falls for eighth month running, fastest rate since June 2009 (45.9).
Services Activity falls at fastest rate since July 2009. Manufacturing Production declines at weakest rate in five months.
New Orders
 
Composite New business declines at fastest rate since May 2009.
Services New business down for thirteenth month running. Manufacturing New orders fall for sixteenth month running, at broadly similar pace to August.
Backlogs of Work
 
Composite Outstanding business declines at strongest rate in over three years.
Services Fifteenth successive monthly decline. Manufacturing Backlogs fall at strongest rate since July.
Employment
 
Composite Jobs decline at strongest rate since January 2010.
Services Employment declines at fastest rate since November 2009. Manufacturing Employment declines at weakest rate in four months.
Input Prices
 
Composite Input price inflation at five-month high.
Services Input price inflation at six-month high. Manufacturing First rise in input prices for four months.
Output Prices
 
Composite Output prices fall at weakest rate in four months.
Services Charges down for tenth month running. Manufacturing First rise in output prices for four months.
PMI
(3)
 Manufacturing PMI below 50.0 for fourteenth month running, but at six-month high of 46.0.
Output
3035404550556065
199819992000200120022003200420052006200720082009201020112012
ServicesManufacturingCompositeEurozone PMIs - Output
 
New business
253035404550556065
199819992000200120022003200420052006200720082009201020112012
ServicesManufacturingCompositeEurozone PMIs - New Business
 
Employment
30354045505560
199819992000200120022003200420052006200720082009201020112012
ServicesManufacturingCompositeEurozone PMIs - Employment
 
Input prices
2030405060708090
199819992000200120022003200420052006200720082009201020112012
ServicesManufacturingCompositeEurozone PMIs - Input Prices
 
Output prices
35404550556065
199819992000200120022003200420052006200720082009201020112012
ServicesManufacturingCompositeEurozone PMIs - Output Prices
 
Source: Markit.
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