Aline Schuiling, senior economist at ABN AMRO, notes that the final estimates of the eurozone PMIs showed that the gap between activity in manufacturing and services widened further in March.
Key Quotes
“The difference between the eurozone manufacturing PMI (down from 49.3 in February to 47.5 in March) and services sector PMI (up from 52.8 to 53.3) widened to -5.8, up from -3.5 in February. At its current level, the gap between manufacturing and services is the widest since early 2009, when world trade collapsed during the global financial crisis.”
“We think the current widening of the gap again reflects a sharp deterioration in global trade. Indeed, within the group of the largest eurozone countries, the manufacturing PMIs of Germany, the Netherlands and Austria have dropped the most since the middle of 2018. These countries all have a high share of goods exports in GDP (Germany and Austria around 40% and the Netherlands around 65%).”
“On the other side of the spectrum are France, Spain and Greece, which have a relatively small share of goods exports in GDP (France and Spain around 20% and Greece around 10%) and also saw a relatively modest decline in their manufacturing PMIs.”
“Looking ahead, we expect global trade to improve modestly in the second half of this year, which should result in a pick-up in manufacturing output in the eurozone.”
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