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Markit PMIs - March 3, 2018

A Survey of PMI Surveys:

In the February 20th edition of TFTD, we looked at Philly and Empire Fed data, highlighting how surveys were useful in providing a glimpse into future macro trends. In that context, this week’s Markit Manufacturing, Services, and Composite PMIs, Purchasing Managers’ Index,  for a whole host of countries was a bit of a bonanza. Not only did it afford us the opportunity to dig into the meat of what’s going on in Europe. 

Overall, all is going very well. From the Eurozone Composite:

“So far, this year, the PMI is indicating that the eurozone is on course for the strongest quarterly expansion for 12 years, consistent with GDP rising at a buoyant quarterly rate of 0.8-0.9%. The upturn also remains as broad as it is strong” with Germany, Italy, France, and Spain all growing notably.

In Manufacturing, there was one caveat, the Euro:

“There are signs, however, that growth could cool further in coming months. A slowdown in growth of new export [including intra-eurozone] order inflows to an 11-month low suggests that the appreciation of the euro may be starting to curb export sales.”

However, what interested us most were the inflation references:

“In terms of prices, the stronger euro appears to be helping bring down imported inflation, but widespread cases of demand exceeding supply highlight the ongoing presence of solid underlying core inflationary pressures.”

In services, the theme of wage and energy-based price pressures emerged. From the German Services PMI:

“[T]here were also signs of labour market tightness, with the survey indicating upward pressure on salaries and finding evidence of firms being unable to source suitable workers”

In France:

“[S]ervice sector firms reported a further marked rise in input costs, albeit to a weaker extent than January’s 80-month high. Among those reporting an increase, panelists often commented on higher wage bills and rising energy prices.”

And even in Italy:

“Fuel prices and employment-related costs were noted as the primary drivers of inflation in February.”