Euro zone Manufacturing PMIs likely to record strong performance in Q4

Euro zone December final manufacturing PMIs were revised up from the flash reading to 53.2, the highest since April 2014, driven by stronger output and new orders. Growth in industrial production is expected to improve in the fourth quarter of 2015, after witnessing low growth in the previous two quarter.

Stronger output and new orders drove the bulk of the German headline upward, as German PMIs were revised up from the flash reading to 53.2, up to a 4-month high. With strong demand supporting manufacturing PMI, the industrial activity could rebound in Q4 after significant contraction seen in Q3. French PMIs were revised down to 51.4, mainly triggered by lower output and new orders, yet manufacturing PMIs stood at more than their 1 ½ year peak, as new orders climbed over the month.

Italian manufacturing PMIs rose to 55.6 (+0.8 points) in December, reaching multi-year highs on stronger demand, while Spanish PMIs remained broadly stable at 53.0, near a 3-month high. Weaker euro, low raw material prices and improving demand suggest positive growth for the Italian manufacturing sector. Spain's decline was triggered by lower hiring intentions, while output strengthened to 55.2, the highest since August 2015.

Although today's data is slightly weaker as compared to the first half of the year, it suggests that the manufacturing sector performance in the Euro zone remained strong in Q4.