German Economic Contraction Begins As Both Mfg And Services PMI Prints Miss Expectations

Tyler Durden's picture

Another reason why Angela Merkel is furiously contemplated just how to kill the EUR next, was this morning's German manufacturing PMI which came at a far wear weaker than expected 55.3 (on expectations of 57.6). Same thing with the services PMI which missed a consensus reading of 57.0 to land at 54.6. Even Goldman's Dirk Schumacher who has long been screeching about the imminent second coming of the Sun King who will make all things well, is starting to realize that in the central bank FX game, economic outlooks now change intervention to intervention.

From Goldman Sachs:

September flash PMIs show another big decline. The manufacturing PMI came in at 55.3 after 58.2, while the services PMI declined to 54.6 after 57.2. The 'new orders' and 'new business' sub indices reported a similar decline as the headline figures. Moreover, export expectations declined to the lowest level since September last year (51.9 after 54.3). Note, however, that 'employment' edged higher in both manufacturing and services.

The September PMIs are signaling a further loss of momentum of the economy at the end of Q3, though the index level remains consistent with moderate growth. The fact that employment is still growing suggests that companies remain relatively optimistic about the medium-term outlook. We are forecasting German GDP growth to be at 0.4%qoq in Q3 and Q4. While business sentiment in July and August pointed to some upside risk to this forecast, the September PMIs are roughly consistent with this forecast. 



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Midasfinancas's picture

Glad i shorted it on the opening bullshit pump.

Sean7k's picture

Well, with so many saying double dip, what will it require before financial reporters see the light? 

People do not expand activity without buyers. Buyers don't purchase without a hope for demand. Demand does not exist without hope. Hope does not bloom from massive unemployment and government/personal/corporate debt. 

Pretty simple really...

Young's picture

They never will, they'll spin every bad piece of news making it sound good. Their careers depend on it. Unpartial media covereged is one of the largest myths ever made up.

Justibone's picture

Reverse beauty pageant continues.

tom's picture

These numbers aren't so bad, once you strip away the bs "expectations" of stellar performance. If the Germans can avoid a 2h dip after the 2q growth spurt, they're doing well, in my book. It was obvious they were riding on euro weakness and would stumble as the euro recovered.

FischerBlack's picture

The 10 Year Note yield correlation to the S&P gave some pretty bearish signals recently.


The Franchise's picture

How can you have any pudding if ya don't each ya'r meat?

.... just another brick in the wall.

Caviar Emptor's picture

Sharp top already in. 

Chris1's picture


Quite amusing, the illusionary world the financial markets are living in.

Germany is one of the few western countries that didn't ship its industrial base to China in exchange for banker's boni. Outcome? Lowest unemployment rate in decades, economy is doing quite ok. Bankers are having less and less influence, huge outcry because HRE wants to hand out 25 million € in boni (yes, you read that right, 25 million not 25 billion). Now, what did I want to say? Right. Maybe the West should take China as an example and start by letting investment bankers harvest cotton.

HarryWanger's picture

Thanks for posting this story. This is rather big news being ignored by the CNBC/Marketwatches or the world. They're just happy the US "beat" expectations on the most idiotic indicator of them all, Leading Indicators.

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