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What's going on?
An important monthly survey of economic activity in the eurozone was released on Friday, and the news wasnt encouraging: it was the weakest month for growth in almost two years.
What does this mean?
The data suggests that the eurozones economy is struggling to maintain the (moderate) momentum it generated earlier this year. Septembers survey reading is consistent with economic growth in the past three months of about 0.3% – about half the rate the eurozone economy grew in the first quarter of 2016.
Why should I care?
The bigger picture: France is performing better than Germany in terms of growth.
After years of under-performance, the data for France in September was markedly better than for Germany. It appears that France might be playing a bit of catch up (though it has a long way to go to recoup its under-performance since the 2008 financial crisis).
For the markets: The manufacturing sector is apparently doing much better than services.
Data on manufacturing actually hit a multi-year high, however the services sector (e.g. restaurants, shops, accountants and lawyers) dragged down the overall reading. Services is a much bigger part of the economy. Its not clear why this dynamic is occurring, but it does point to stronger foreign demand (because much of European manufacturing is exported) and weaker fundamentals within the eurozone (since most services are consumed domestically).
Originally posted as part of the Finimize daily email.
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