October's PMI is due for release across the EMEA region today

EMEA Daily

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On Friday, Estonian Statistics published industrial production (IP) and retail trade data for September. We saw a continuation of the “stable” drop in IP of 30% y/y in September. Over Q3, IP has fallen 29.0% y/y, an improvement from -32.5% y/y in Q2 09. Retail trade declined 17% y/y in September, down from -16% y/y in August. Over Q3 the slump in retail trade accelerated. In sum, there was no improvement in retail trade and industrial production over Q3. Thus we don't expect an improvement in GDP for this period. The contraction is likely to be the same as in Q2, or could be marginally worse at -16.5% y/y, down from -16.1% y/y in Q2 09. For the whole year we maintain our -15.0 y/y GDP growth forecast, while expecting more positive news over Q4.

Preview

October’s PMI is due for release across the EMEA region today. In the recent month the PMI has rebounded across the region in line with the general global trend. We expect the PMI to have increased further from September to October in most countries in the region, and in most the index should have moved back to close to or even above 50, indicating expanding economic activity in the CEE manufacturing sector.

Trading update

Most EMEA currencies remained under pressure on Friday as the positive effect from the stronger-than-expected US GDP numbers for Q3, which brought some stabilisation into EMEA FX on Thursday, diminished.
Our EMEA FX scorecard continues to send the most negative signals for the Hungarian forint and the South African rand – we continue to see the largest risks in these two currencies going into this week. The scores for both the Polish zloty and the Czech koruna have moved back into more neutral territory in our EMEA FX scorecard, which indicates that these two currencies will outperform HUF and ZAR this week.
Czech rates inched down on Friday and could drop further this week ahead of the monetary setting meeting on Thursday.

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Published On Mon, Nov 2 2009, 06:44 GMT

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