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The cyclical divergence between the US and Europe continues, as the November US manufacturing PMI pointed to continued strong growth while the euro area PMIs did not bring the rebound in momentum that markets were hoping for, explains the research team at Danske Bank.

Key Quotes

“It looks like some the recent euro area growth weakness will persist in Q4, as composite PMI fell to a 4-year low. Manufacturing remains the main area of weakness amid slower global demand, rising political and economic uncertainty, trade war repercussions and persistent sluggish car sales. However, the slowdown is also broadening out to service sector activity, where demand and new business inflows havewaned recently. The data is increasingly challenging the ECB’s ‘balanced’ growth assessment and its belief in temporary factors lying behind the recent slowdown, although we do not expect it to derail the QE exit strategy at the 13 December meeting.”