Courtesy of Mish.
Let's take a look at weaker than expected reports from the Eurozone in aggregate, and France and Germany in particular.
France
The Markit Flash France PMI shows French private sector output falls for seventh successive month.
Key points:
- Flash France Composite Output Index rises to 48.4 (48.2 in October), 2-month high
- Flash France Services Activity Index climbs to 48.8 (48.3 in October), 3-month high
- Flash France Manufacturing Output Index falls to 46.5 (48.0 in October ), 3-month low
- Flash France Manufacturing PMI drops to 47.6 (48.5 in October ), 3-month low
Summary:
While service providers reported the slowest fall in activity of the current three-month period of decline, manufacturers indicated the sharpest reduction in output since August. Lower output at French private sector companies reflected a further decrease in new business. November marked the third consecutive month in which new work has fallen, with the rate of decline accelerating to the sharpest since June 2013.
Employment in the French private sector continued to fall in the latest survey period, in line with the trend observed since November 2013.
French private sector companies reported another drop in outstanding business during November. The latest fall was the seventh in successive months and the sharpest since M ay 2013. Service providers indicated an accelerated decline in backlogs, whereas manufacturers reported a slightly slower fall.
Price trends continued to diverge in November. Input costs rose, with the latest increase the fastest in three months, albeit modest over all. Service providers and manufacturers reported similar rates of input price inflation. However, output prices fell further, amid reports of strong competitive pressures.
My comments on France
With falling commodity prices, especially oil, why have input costs risen? Labor?
Whatever the reason, margins are shrinking rapidly because prices paid is rising while prices received for final goods and services drops. VAT collection will decline as well.
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