Soft US and Euro Area PMI Suggests Sharp Economic Contraction in US and Europe

The stock markets have been suggesting it for a while, and that is probably why they ignored the latest PMI figures from the US and Euro area. A two trillion USD fiscal stimulus is also helping the mood amongst investors.

On March 24, we received a comprehensive update on the economic situation via the US and Euro area PMIs, and the situation is not good. The Euro area PMI composite dropped to 31.4 from 51.6, and lower than the 38.8 projected, while the US Markit PMI composite declined to 40 from 49.6. However, both the manufacturing sectors in the US and Europe performed better than expected. In the US, the drop was minimal, and we saw a decline to 49.2 from 50.7.

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