Poor German Flash PMI Confirmed by Business Climate Survey

CESifo Group Munich – Ifo Business Climate Index Edges Downwards.

German Business Confidence Unexpectedly Drops – Bloomberg.

Yesterday, we noted that Markit Flash PMIs for March indicated a deepening of the Eurozone recession led by a surprising fall in Germany’s number to just over 50, Eurozone Recession Deepens .  A PMI over 50 signals expansion and under 50 contraction.  While Germany has not entered a contraction, a reading around 50 equates to economic stagnation.

Today, Markit’s findings were confirmed by Munich’s Ifo group’s business climate index.  After growing steadily since the fall, the index took an unexpected  plunge in March:

Ifo Business Climate Survey March 2013

All sectors witnessed reduced expectations including manufacturing, the core of the renown German export machine:

Ifo Business Climate Survey Manufacturing March 2013

The eurocrats are forecasting a return to growth for the entire Eurozone in the second half of 2013, but as the economic indicators roll in this seems less and less likely.  Europe may be able to return to growth in 2014 if it gets all of its budget cuts out of the way in 2013 and if the U.S. and China continue to grow through the year.  Otherwise, expect more GDP shrinkage and missed deficit forecasts to the downside for the remainder of 2013.



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