French President Francois Hollande waits for a guest at the Elysee Palace in Paris, France, December 2, 2015.REUTERS/Charles PlatiauFrench President Francois Hollande.
It's flash PMI day in Europe, meaning we get a snapshot of growth in the Eurozone's two powerhouses — France and Germany.
Overall the picture is not good. Eurozone flash figures missed forecasts and both France and Germany disappointed.
France's composite growth beat forecasts but there was a big drop-off for the manufacturing sector. And Germany missed forecasts for both manufacturing and services, with a big drop-off on overall growth.
These are just preliminary readings for January, so could be revised upwards. But it's unlikely they'll see any significant improvement in the final figures.
Each PMI reading is given as a figure between 0 and 100 — anything above 50 signals growth, while below means contraction.
France is up first, here's what we've got:
  • Manufacturing: 50 — well below economists forecasts of 51.3 and down from 51.4 in December;
  • Services: 50.6 — above expectations of 50.2 and an acceleration from December's figure of 49.8;
  • Overall economy: 50.5 — an acceleration from 50.1 last month.
While the overall picture is not bad, the huge collapse in manufacturing will be a worry to President Francois Hollande. The President this week declared a state of economic emergency, pledging to spend €2 billion (£1.5 billion, $2.1 billion) to tackle France's stubbornly high unemployment.
Here's how Germany did:
  • Manufacturing: 52.1 — below forecasts of 53 and down from 53.2 in December;
  • Services: 55.4 — below estimates of 55.6 and down from 56 in December;
  • Overall economy: 54.5 — down from 55.5 in December.
Germany's figures are disappointing across the board, with a particularly big drop off in manufacturing. The country does a lot of trade with China, so the rocky start to the year for China's stock market and growth uncertainty there may have hit exports.
  • Manufacturing: 52.3, against a forecast of 53;
  • Services: 53.6, versus an earlier estimate of 54.2;
  •  Overall economy: 53.5, against a forecast of 54.2.
Chris Williamson, Markit's chief economist, says in the statement:
The cooling in the pace of growth in euro area business activity at the start of 2016 is a disappointment but not surprising given the uncertainty caused by the financial market volatility seen so far this year.
It would be wrong to get too worried. The survey data are consistent with GDP rising at a steady quarterly rate of 0.3-0.4% at the start of the year. Firms also appear to be looking to brighter times ahead, with business confidence improving, linked in turn to backlogs of work rising at the fastest rate since the spring of 2011.