PMIs rose slightly as expected in December, pointing towards ongoing, but still slow growth. ZEW expectations for Germany also increased, fuelled by cheaper oil and boding well for the Ifo index on Thursday.
As expected, both the manufacturing and the service PMI slightly increased in December, pointing towards ongoing, but still slow growth in the Euro area. Cheaper oil and a weaker euro should lead to a slightly stronger recovery during next year. On the positive side, the new orders component in the manufacturing sector rose above 50, and the employment subindex is now back to almost 51 (see table). In France, all major indices remain below 50. For the Euro area, we pencil in GDP growth of 0.2% q/q for both Q4 and Q1 and feel comfortable with that.
In Germany, ZEW expectations rose strongly, the second rise in a row. We put more weight on Ifo numbers that will be published on Thursday. Given the correlation between ZEW and Ifo (see chart), the latter should point to a strengthening of the German economy, too. While the lower oil price is good news (not only) for Germany, the difficulties of the Russian economy could weigh on sentiment going forward.
Nordea