German PMI Shrugs Ifo & ZEW
Only nine days after Germanys ZEW expectations index shot up to a 21-month high in March, German manufacturing PMI fell back below 50 for the same month, dipping to its lowest level since November at 48.1. Germanys services PMI slipped to 51.8 from 52.8, also its lowest since November--prior to the start of LTRO-1.
OUT OF GERMANY'S 3 DIFFERENT SETS of business/sentiment indicators (PMI, Ifo & ZEW), the PMI is the only data group, which fell steadily since January. PMI surveys reflect the opinions of purchasing managers and decisions makers, with an emphasis on output, new orders, inventories, employment and prices across the manufacturing, construction, retail and service sectors.
The ZEW survey does not share the credibility of the Ifo and PMI surveys in tracking and predicting German economic growth and the outlook for the Eurozone. The ZEW survey involves responses from about 350 economists and analysts regarding the economic future of Germany for the next six months.
The other two surveys were quick to capture the notion that Germany remains resilient to the negative macro currents in the periphery as well as the market reactions to LTRO-1 (December) and LTRO-2 (February). But such ultra-sensitivity to the data may also prove its weakness.
Euro markets (FX & bonds) may find it hard to adjust to the ECBs sudden removal of the possibility of further LTROs from recent rhetoric. This is unlike the Federal Reserve Chairman, who never misses a chance to allow the door open for a new round of asset purchases at each testimony.
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