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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (72318)	2/1/2010 3:02:26 PM
From: Haim R. Branisteanu	Respond to of 74559

European PMI January Actual: 52.4 Flash: 52.0 Previous: 51.6 Released: Monday, February 01, 2010 at 10:00 (Euroland) BOTTOM-LINE: At 52.4, the final reading was clearly stronger than the flash (52.0). Larger countries continued to improve (Germany 53.7, France 55.4, Italy 51.7) - Spain continued to languish at the bottom (46.3) while Greece and Ireland lost further momentum (46.8 and 48.0). Data are consistent with GDP growth of about 0.5%qoq at the start of Q1 - we expect 0.4%qoq. DETAILS: 1/ The stronger than expected manufacturing PMI was driven by a substantial upward revision to France's index, 55.4 from 54.7. Germany's index was also revised up, 53.7 instead of 53.4. Italy's PMI rose to 51.7 after 50.8 while the Dutch index was up to 54.8 after 53.1. 2/ Countries on the Eurozone periphery continued to struggle: Spain's PMI was broadly stable, 46.3 after 46.2; Ireland's PMI decelerated to 48.1 after 48.8; and Greece's index dropped to 46.8, after 48.8. 3/ Among the Eurozone's index components, we highlight a disappointing drop in the Employment index, 43.9 after 45.1 in December. Orders were fairly strong, 56.0 after 53.6 while the pace of contraction of inventories decelerated further, 44.5 after 43.5. The ratio of Orders to Inventories recovered to a fairly strong 113.3, after 111.3, signalling sustained industrial momentum ahead, see Chart below. 4/ The Input Prices index rose to 57.3 after 55.1, its highest since September 2008, suggesting rising inflationary pressures in the industrial sector. 5/ Today's PMI reading, together with the flash services PMI (52.3 after 53.6), are consistent with GDP growth of about 0.5%qoq at the start of Q1. This is a bit above our forecast of 0.4%qoq, which assumes some small deceleration in the PMI readings in February and March. For Q4, we are expecting 0.6%qoq, with risks clearly on the downside. For further information on the methodology and interpretation of our EMEA-MAP, please consult European Weekly Analyst 10/01