IHS Markit Flash Eurozone PMI® – This is what you need to know
Output, demand, employment and inflation are showing that Europe is doing great:
“The eurozone economy is showing signs of picking up momentum in the fourth quarter, with multi-year highs seen for all main indicators of output, demand, employment and inflation in November. Business activity and prices rose at the steepest rates for over six years, while the largest accumulation of uncompleted work for over a decade encouraged firms to take on staff at a rate not seen for 17 years. The headline IHS Markit Eurozone PMI rose to 57.5 in November, according to the ‘flash’ estimate (based on approximately 85% of final replies), up from 56.0 in October and its highest since April 2011.” Source
Manufacturing is the most significant.
“The latest reading puts the economy on course for its best quarter since the start of 2011. The upturn was again led by manufacturing, where the headline PMI rose to a level beaten only once – April 2000 – since the survey began in June 1997. Faster manufacturing output growth was accompanied by improved services growth, which rose to the highest since May, registering one of the largest expansions seen over the past six-and-ahalf years. Inflows of new orders showed the largest gain since February 2011.” Source
They said the following about employment…
Further signs of capacity being stretched were seen in a lengthening of manufacturing suppliers’ delivery times, which signalled the highest incidence of delays for over 17 years. Longer deliveries reflected higher demand for inputs from manufacturers, where inventories over the past two months have risen to a degree rarely seen in the survey’s history.
Price are going up…
The faster pace of growth signalled by the surveys was accompanied by price pressures hitting the highest since mid-2011. Average input costs were pushed higher by the combination of rising global prices for key commodities, such as oil, as well as greater pricing power amid improved demand conditions. Input prices showed the largest monthly jump since May 2011 while average selling prices for goods and services rose to the greatest extent since June 2011. Expectations about the next 12 months cooled slightly in both sectors in November, indicating one of the lowest degrees of optimism seen over the past year, but nonetheless remained elevated by historical standards.
The following comment is key:
“Jobs are being created at the fastest rate since the dot-com boom, yet despite this increase in operating capacity firms are struggling to meet demand. Backlogs of uncompleted work are growing at the fastest rate for over a decade, often resulting in a sellers’ market as customers struggle to source goods and services. Prices are consequently rising at an increased rate”