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23 Sep 2014
Eurozone disappointing PMI suggest more expansionary macroeconomic policy needed - ING
FXStreet (Łódź) - Martin van Vliet from ING comments on today's Eurozone PMI releases with the Composite PMI falling to the lowest level in 9 months.
Key quotes
"Looking at the data by country, the divergence between the performances of Germany and France showed signs of widening again, with the French composite PMI falling back below the 50 breakeven level (from 50.3 to 49.4) and the German index rising (from 53.7 to 54.0)."
"Meanwhile, the average PMI reading for the rest of the region fell to a six-month low."
"On past form, the current composite PMI reading for the Eurozone is still consistent with quarterly GDP growth of about 0.2%, so the economy retains some forward momentum."
"But growth momentum is very weak. In terms of policy implications, today’s figures clearly suggest that the region needs a more expansionary macroeconomic policy."
"Fortunately, the ECB is well aware of the need for further stimulus and has expressed an intention to increase its balance sheet by €1 trillion."
"However, we think the ECB will struggle to meet this goal via TLTROS and ABS and covered bond purchases alone and hence may need to extend its purchase programmes by adding government bonds."
"Even so, Draghi’s comment on last week’s TLTRO that the September and December operation should be assessed in combination suggests that the ECB is not in a hurry to deploy larger scale QE via sovereign bond purchases."
Key quotes
"Looking at the data by country, the divergence between the performances of Germany and France showed signs of widening again, with the French composite PMI falling back below the 50 breakeven level (from 50.3 to 49.4) and the German index rising (from 53.7 to 54.0)."
"Meanwhile, the average PMI reading for the rest of the region fell to a six-month low."
"On past form, the current composite PMI reading for the Eurozone is still consistent with quarterly GDP growth of about 0.2%, so the economy retains some forward momentum."
"But growth momentum is very weak. In terms of policy implications, today’s figures clearly suggest that the region needs a more expansionary macroeconomic policy."
"Fortunately, the ECB is well aware of the need for further stimulus and has expressed an intention to increase its balance sheet by €1 trillion."
"However, we think the ECB will struggle to meet this goal via TLTROS and ABS and covered bond purchases alone and hence may need to extend its purchase programmes by adding government bonds."
"Even so, Draghi’s comment on last week’s TLTRO that the September and December operation should be assessed in combination suggests that the ECB is not in a hurry to deploy larger scale QE via sovereign bond purchases."