· But has Europe already been flattened?
· The services and MFG PMIs (form NTC/Markit) for EMU flattened out this month falling month-to-month but barely falling. As a result the services and MFG PMIs are at the bottom of their recent ranges dating back to January 2006. For MFG indices stretch back to 1998 and in that broader range their current reading resides in the 26th percentile, nearly the bottom quartile. But by count MFG PMIs have been weaker than this value only 6% of the time. So while the weakest reading is a lot lower MFG PMIs are rarely lower than they are now.
· The MFG reading is the more interesting of the two since it spans a longer time horizon. The services index is still relatively new and untested in a Biz cycle. Still the two indices together paint a weakening picture of the Zone. One unanswered question is how much the recent drop in oil prices will breathe new life into fading sectors. It is still too soon to tell, although German financial experts who were respondents to the Zew survey seem encouraged.