IHS Markit European GDP Nowcasts Update 24th July 2019: Downward revisions for Germany and Eurozone

In July 2019 we introduced two nowcasting models for the Eurozone and the UK. The models utilise a range of data widely used to track economic developments and provide timely estimations of quarterly GDP growth.

As the datasets include information provided from business surveys, official statistics offices and the financial markets, there is a steady flow of new data available to us during a quarterly nowcasting cycle. With our model frameworks comfortably able to incorporate this new information in a statistically efficient manner, this calls for regular, real-time, nowcast updates which we present in this new report.

Alongside the nowcasts for the Eurozone and the UK, we have also been able to extend our coverage to include updates for France, Germany and Italy.

Summary: 24th July 2019

This week's notable changes to the nowcasts are seen in Germany (-0.08% for the third quarter, compared to +0.11% last week). The downshift largely reflects the weak manufacturing PMI numbers for July.

Given the projected similarly weak estimate of -0.11% for Q2 2019, based on the current newsflow, Germany's underlying economic trajectory appears to be skirting close to a technical recession. However, given we only have limited data availability for Q3 2019 so far, we await further PMI readings plus official data updates for the rest of Q2 and into Q3 to get a better sense of the current performance of the euro area's largest economy.

Third quarter GDP estimates are also revised lower for the eurozone this week (down to +0.13%, from a previous +0.22%). As with Germany, this is also mainly due to weaker-than-expected manufacturing PMI figures, as well as disappointing official construction output data for May.

With France recording PMI data broadly in line with recent trends in July, and little in the way of new data for Italy and the UK, respective nowcasts in these countries subsequently remain little changed since last week.

Joe Hayes, Economist, IHS Markit
Tel: +44 1491 461006
joseph.hayes@ihsmarkit.com

Paul Smith, Director, IHS Markit
Tel: +44 1491 461038
paul.smith@ihsmarkit.com

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Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

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