The finalized Euro area MFG PMIs from NTC show a picture of a weakening MFG sector. All countries for which up-to-date MFG readings are available show MFG is still expanding in September on a country by country basis in EMU (i.e. readings on the NTC index are still above 50). Yet the red monthly figures show period-to-period declines are now common and have been so for the region as a whole. All the large EMU economies (Germany, France, Italy and Spain) show month-to-month declines in MFG PMI for three straight months with the exception of Italy’s m/m rise in August. If we view these reading as a time series and ask which of the MFG sectors is at reading that is low compared to its own history only France is below the mid-range mark. Its 50.51 reading in September is below the midpoint of the range for France since March of 2000. For EMU as a whole the MFG index is in about the 60th percentile of its range for this period.

On balance, the EMU region is showing a loss in momentum. The EC Commission is complaining about the ill effects of a euro that is too strong. Manufacturing is fading in the Euro area although the current readings are still relatively firm and show ongoing expansion. But these readings are no longer strong and the momentum clearly points lower.