Euro zone PMIs is not yet compatible with QE2

ECB President Draghi gave prospects yesterday of monetary easing in December. But the condition for this is a deterioration of the outlook for economic growth and inflation. The purchasing managers' indices for October only partly fit in this picture. The PMI for the manufacturing

 The ECB will only adjust its economic outlook for the euro zone economy downwards in December if the problems in emerging markets are more strongly felt. This means that economic indicators should come in weaker in the coming weeks. So far, the purchasing managers' indices have not pointed to palpably weaker economic growth in the euro zone. The PMI for manufacturing remained at 52.0 in October. The slight downtrend since July has thus not continued.

The purchasing managers' index for the service sector, which in the past exhibited an even closer correlation with the year-on-year rate of change of real GDP than its manufacturing counterpart, rose in October by 0.5 points to 54.2. The index has thus corrected most of the September decline. Since February 2015, the index has moved in a narrow range between 53.7 and 54.4. It indicates that the service sector, which is less dependent on global demand, is growing at an unchanged pace. The decline in energy prices certainly plays a role here as well, as it boosts the purchasing power of private households and the profits of businesses.

"We are still convinced, though, that the weaker global demand will not leave the euro zone economy unaffected. If the ECB comes to share this view, it will revise its growth projections downwards in December and decide further expansionary measures", says Commerzbank.