Euro Area's growth in Q4 could reach 0.5% over the quarter

Euro area's November flash PMIs were better than predicted. The composite index rose to 4.5  years high. Signs of stabilization in China and the weaker Euro might have supported the manufacturing sector.

In Germany, there was improvement seen on a large basis, while in France, there was a pull back in service sector. These will unlikely dissuade the central bank's policy makers from doing "whatever it takes to rise inflation as quickly as possible".

There was a strong increase in the PMIs. Markit writes, "the survey's employment, new orders and backlogs of work indicators all signaled the strongest monthly expansions in four-and-a-half years".

"If we plug the numbers into our GDP model, growth in Q4 could reach 0.5% over the quarter, while Q3 was only 0.3% q/q", says Nordea bank in a research note.  

Germany's service PMI reached highest level in 2015, manufacturing PMI climbed to average in Q3. France's manufacturing PMI edged a tick up, reaching to highest level of the year. The composite PMI fell to average third quarter level. Hence, there are no reasons to expect stagnation in Q4. 

There was a decline in the service sector, however these would change from month to month. The recovery continues, bit strong in Germany, than in France, which might strengthen in fourth quarter for the whole Euro area 

"The updated population forecasts for 2015 and 2016 are largely unchanged. The sharp rise in the population in 2017 makes forecasts on public finances more uncertain", added Nordea Bank.