Wednesday, March 26, 2014

France vs. Germany - a Eurozone puzzle

Here is a puzzle. We are seeing an unexpected divergence in private sector activity indicators for Germany and France. The manufacturing report for France came in materially better than was forecast by economists while the one for Germany was worse.

Source: & Markit

The services sector PMI measures show a similar divergence to those for manufacturing. What's particularly puzzling is how broad based this divergence has been.
  • Markit (France): - Expansion was broad-based across the service and manufacturing sectors. Services activity increased for the first time in five months during March. Growth was at a 26-month high, albeit modest overall. Manufacturers reported a solid rise in output that was the sharpest since May 2011. [ - see story]
  • Markit (Germany): - The easing in the rate of activity growth was broad-based, with both manufacturers and service providers indicating weaker expansions than seen in February. Companies in the goods producing sector reported the slowest rise in output since November, while growth in the service sector eased to a two-month low. [- see story]
Thoughts, comments?
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