Manufacturing PMIs: Mixed global development continues; France improves significantly

Flash estimates of March manufacturing PMIs for major countries were released this week. In Germany, the poll data indicates accelerated production growth for 1Q14, despite a slight decline in March. The ifobusiness- climate, also released this week, has slightly dropped after previously having risen four consecutive times. It seems as though recent events (Emerging Markets and the Crimea crisis) have burdened sentiment somewhat. Thanks to a rise in new orders, France’s manufacturing PMI poll data improved significantly in March after a period of weakness. The INSEE business-climate – the more reliable indicator – remained, as in February, stable. A positive highlight of this survey has been increased value with regard to new export orders. In the case of Italy, the ISTAT businessclimate improved further, mainly thanks to better sentiment towards the service sector.

The survey data for the entire Eurozone also indicates accelerated production growth for 1Q14. The Eurozone composite index value for March – a measure that also takes the service sector, where recent poll data improved slightly, into consideration – remained more or less stable, at 53.2. By mid-April, the release of industry production data for February, will show whether the recent positive poll data can be confirmed nor not.

Overseas markets continue to send mixed signals. In China, the manufacturing PMI value declined again (48.1 after 48.3 in February) and stayed for a third consecutive month below 50, the threshold level for growth. While domestic demand weakened further, at least foreign demand showed some signs of improvement. Any protracted weakness of China’s economy would be a downside risk for German exports to Asia, given that these account for a significant share of total exports. In contrast, the climate for US industry improved again in February.