Germany has borne the brunt of the slowdown in global trade. The manufacturing PMI was unrevised from the flash estimate of 44.3, a 2-month low). The labour market is going through a soft patch: vacancies are falling in-line with the deterioration in the IAB Labour Market Barometer.
This morning’s German services PMI for May, however, was revised up from 55.0 to 55.4. According to Markit, “the pace of job creation eased from April’s recent peak but remained among the quickest since data collection began in 1998”. The German service sector may be picking up more slack than is currently appreciated.
The reality may be that the Eurozone service sector has an enduring ability to carry the bloc forward in this period of rising trade tensions. French service sector confidence has rebounded this year. Germany may well succeed in riding out the storm too.
For sure, the decline in Eurozone unemployment slowed in April, according to Eurostat, down just 64k in April after March was revised from -174k to -157k. Nevertheless, the downward revisions to previous months were sizeable. On a six-month change basis, the drop in February was revised from -179k to -226k. The six-month decline in March was steeper too (revised from -263k to -281k) and accelerated further to -300k in April, the biggest such drop since August 2018. The Eurozone unemployment rate fell to a new cyclical low of 7.6%.
