German manufacturing activity may recover in Q4 15

German PMIs were notably revised up from the flash to 52.1, still inching down in October; while French PMIs held firm at 50.6, vs. 50.7 in the flash reading. Stronger output and new orders drove the bulk of the German headline upward revision. But German PMIs edged down in October to a three-month low, as dips in output and employment offset the modest increase in new orders. 

Worryingly, inventories hit the highest level since the series creation, suggesting that demand in the coming months could potentially be met by depleting stocks rather than increasing production. In France, the slight downward revision was  triggered mainly by lower output and new export orders, while hiring intentions were revised up. 

Overall, PMIs were unchanged in October at 50.6, yet with new orders at the highest since April 2014. This echoes the fairly positive INSEE quarterly survey for industry, and suggests that manufacturing activity could recover in Q4, notes Barclays.