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German PMIs disappoint in November – ING

“New growth worries or just an unreliable indicator? “ says, Carsten Brzeski of ING, as the first reading of Germany’s PMI for November disappoints and dents hopes that the Eurozone’s biggest economy will accelerate in the last quarter of the year.

Key Quotes

“The composite PMI dropped to 52.1 in November, from 53.9 in October, and stands at its lowest level since July 2013. At the same time, the PMI manufacturing fell to 50.0, from 51.4, while the PMI services dropped to 52.1, from 55.7.”

“At first glance, the drop signals a slowdown rather than a rebound of the German economy in the final quarter of 2014. This would be bad news for the rest of the Eurozone, given that Germany has been in a stagnation for already two quarters in a row.”

“At second glance, however, today’s data should be taken with a pinch of salt as the PMI has been a rather unreliable nowcaster of the German economy in recent years. The threshold between economic expansion and contraction was rather at a PMI of around 53 than the traditional 50.”

“In our view, the strong labour market, lower energy prices, solid private consumption and a recovery of foreign demand on the back of a weaker euro should support the economy in the final quarter of the year.”

“However, even if its forecasting track-record is not the best, today’s PMIs cannot simply be ignored. They fit into the picture of an economy which is struggling to gain momentum and leave stagnation behind.”

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