September’s flash German manufacturing PMI came in at 41.4, the weakest print in 123 months (that’s 10 years, 3 months, so back to the GFC).

The reason we pay attention to PMIs is that they are much more timely than official data. Today’s PMI is for September, the manufacturing output data it is meant to foreshadow is available only to July.

What it implies, therefore, is more weakness to come. The relationship of the PMI to actual manufacturing output is not hard and fast – but closest at the YoY level (somewhat of a puzzle, though perhaps that is how purchasing managers think). A print of 41.4 historically is consistent with a 10% YoY slump in output, but we can’t be confident in that given the limited number of datapoints available (for example in 2012 such a relationship would have been too pessimistic). A safer conclusion is that we are very unlikely to see any German output growth over this period.