Euro area PMIs to remain steady in September

Any drastic changes are not expected in the PMI values to be released this week. The composite PMI for the euro area as a whole will again be 54.3, with a decline in the manufacturing PMI balanced out by a slight increase in the more heavily weighted services PMI. The story is also mixed on a country-by-country basis. 

"The German manufacturing PMI is expected to fall from 53.3 to 52.6, while we forecast the equivalent French number to rise from 48.3 to 49.7. Similarly, there should be a fall in the German services PMI (54.9 to 54.5), but in France, this number should rise 50.6 to 51.5", says Societe Generale.

PMIs are expected to continue around current levels in the coming months. Despite continued uncertainty over China, which should have some negative effects on PMIs going forward, there is modest potential for upside surprises. It is believed that the current recovery in the euro area comes on the back of lower fuel prices and job creation, which have continued to boost disposable household income and spur the demand-led recovery. These PMI levels would be consistent with GDP growth in the range of 0.4%-0.5% qoq, close to the Q3 GDP forecast (0.4% qoq).