There have been one or two positive signs in the past week or so, such as the increase in German industrial production in August. But the overall picture remains gloomy. Indeed, at face value the Composite PMI, which is one of the most reliable timely barometers of the economy, implies that growth may have stalled in September. Domestic demand seems to be slowing as employment growth has come off the boil, and average earnings growth has stopped rising. Meanwhile, the external backdrop has not improved: there has been a sequence of underwhelming business surveys from the US; we suspect that China’s economy is still slowing; and the risk of a no-deal Brexit by the UK is mounting. All told, we see little reason to believe that the downturn in Europe has bottomed out.
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