By David Schutz, THE TAKEAWAY:German PMI manufacturing drops to two-year low -> Weak numbers across the Eurozone -> EU leaders to meet WednesdayGerman October PMI numbers released today brought a mixed-to-weak picture, with the headline manufacturing index plummeting to a two-year low for the second straight month. PMI manufacturing came in at 48.9, over a point lower than the expected 50.0 and also lower than last month’s 50.3. Significantly, this month’s numbers represent the first time in years that the EMU’s largest economy has dropped below the crucial mark of 50.0 in this index., indicating that German manufacturing has slipped into contraction in the context of the far-reaching economic crisis currently gripping the Eurozone.On the flip side, PMI services came in at 52.1, indicating growth with a higher number than the expected 49.9 and last month’s 49.7. Additionally, fellow EMU heavyweight France also released mixed-to-weak data directly before the German PMI release: PMI manufacturing and services indicated contraction at 49.0 and 46.0, respectively (the manufacturing figure was slightly higher than expected).Today’s low German numbers come as no surprise to market watchers – German PMI manufacturing has dropped every month for the past six. In September, the index managed to keep its tow in the expansion zone with 50.3 (50.0 predicted), finally succumbing to the debt crisis which has hit manufacturing markets hard around the world. The broader spread sees EU leaders set to meet this Wednesday to propose a solution to the ongoing crisis. France’s Finance Minister Barion today forecasted a European debt accord, mentioning that the amount needed to bail out Europe’s beleaguered banking system would be close 100 billion Euros.The Euro dropped against the dollar following the PMI data release, reversing gains made early on in European trade. Even so, market focus remains on macro issues as the Euro continues to trade above the weekend high on anticipation that European leaders will deliver on their promises of stabilization.
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