Euro Area: Robust but not accelerating outlook (Markit surveys)

Since February 2015 the Markit synthetic index for the Euro Area remains at the same level. At the end of 2014 to February this year there was  an acceleration of the index, but since then, it is in a corridor between 52.4 to 52.7.
This index level remains consistent with a 1.5% GDP growth in 2015. Signals from sub-indices (new orders, employment) give the same information.
In other words, growth is robust in the Eurozone but doesn’t accelerate.
EA-2015-August-PMI-GDP1The comparison between Eurozone, Germany and France for which we have this Markit survey flash-estimate shows that the level is not that high, compared to the past, and that France is a little lower than the two others. This comes mainly from the manufacturing sector where the French index is lagging all the other indices in Europe (except Greece). Germany in August is at its highest since April 2014 and indices in Spain and Italy were very high in July. This reflects probably a weak competitiveness for the French industry. If there is a recovery in the Eurozone, as I expect it, France will  not be able to take all the positive impact it will have.
ea-2015-august-pmi-ea-g-fTwo sub-indices are interesting to follow:
The first is the ratio of New Orders to Inventories. Its profile is consistent with the 3 month change in industrial production. The ratio is stable showing an improvement in industry but it doesn’t show a rapid and strong acceleration: robust but not leading to a rapid improvement in the industry throughout Europe.
ea-2015-august-pmi-ratioThe second graph links the Employment index in the Markit survey to the quarterly change in employment. The two series are consistent and we can expect an improvement in the number of jobs This will reduce households’ uncertainty and that’s positive.

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