Eurozone surveys turning up on schedule
Simon Ward
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Eurozone business surveys remain weak but have improved at the margin, consistent with the view here that activity is bottoming in late 2012 and will revive in 2013 led by Germany and other core economies – see, for example, posts from September and August. This forecast depends on the signal from real narrow money remaining positive – October monetary statistics are released next Wednesday.
Eurozone “flash” PMI results for November were a mixed bag but a key forward-looking indicator – manufacturing new orders – recovered to its highest level since March. The index, admittedly, continues to suggest falling output but a further rise towards the break-even 50 level is likely in December judging from the relationship with real money growth and improving global conditions, evidenced by recent stronger US / Chinese orders – see first and second charts.
The German Ifo business climate index, meanwhile, registered the largest monthly rise since July 2010 in November, driven by the leading expectations component – third chart. Manufacturers were positive about export prospects for the first time since July but expectations also improved sharply in wholesaling and retailing, consistent with real money strength since the spring starting to filter through to firmer domestic demand.
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