Eurozone PMI numbers are a huge disappointment

On the back of bad purchasing managers surveys earlier the Eurozone numbers have been disappointing. Composite PMI fell from 47.9 to 46.5, with manufacturing and services deteriorating while improvements were expected across the board.

Berenberg's Robert Wood:

The sizeable fall in the Eurozone PMI’s is a set-back and suggests the economy remains in recession. With the additional uncertainty caused by Italy and Cyprus in recent weeks, we may be in for a rough ride in the near-term. Business expectations in the PMI fell to a three-month low.

The PMI’s are volatile from month to month, so there is not a precise read to growth. But at their current levels they point to worsening Eurozone contraction. The composite PMI is at its lowest level since November 2012. The French services PMI is at its lowest level since February 2009, a vote of no confidence in the government’s policies. With the PMI’s volatile, the key now is Germany’s IFO release tomorrow. If that remains robust, we may be able to discount some of the PMI weakness.

IHS Global Insight's Howard Archer:

The purchasing managers survey magnify concern that while the Eurozone economic environment has been helped by a marked overall reduction in sovereign debt tensions, lower bond yields and improved business confidence since late-2012 (largely due to the ECB unveiling its bond buying policy) this has not fed through to lift economic activity.