The publication of the PMI activity indicators on both sides of the Atlantic for the month of November reflected the huge gap that now exists between the two zones. The economic dynamics are very different and are reflected in stock market performances that are now hardly comparable. The eurozone is more than ever penalized by its two (former) locomotives stuck, what is more, in political blockages. While we are still wondering how France will manage to bring its public finances back on track (without, we hope, impacting growth too much), Germany, for its part, must completely review its economic model in place since the 1990s and reunification: exports to China, cheap Russian oil and gas and American protectionism. Of the three, none remain.
In the United States, the activity indicators have therefore, once again, confirmed the American exception. The composite PMI thus reached 55.3 compared to 54.1 in October, the highest since April 2022, driven by services which are on the verge of overheating (57 compared to 55 the previous month) while the manufacturing sector remains in a contraction phase. Everything seems to be going well across the Atlantic: producer prices are slowing, tensions on the labor market are decreasing and, above all, business leaders' forecasts are reaching two-and-a-half-year highs, thanks in particular to the pro-business policy desired by the new American administration.
The picture is less bright in the eurozone. The composite PMI thus returned sharply to a contraction phase over the month (48.1 compared to 50 in October). While services had previously compensated for the weakness of the manufacturing sector, they have, against all expectations, fallen back below the 50 threshold, thus ending nine months of growth. The zone is clearly penalized by weak domestic demand and the fear of new customs duties in the United States is weighing on the confidence of business leaders who still cannot count on the Chinese recovery. The ECB therefore has no choice but to accelerate its pace of rate cuts despite wage growth that remains strong. At 5.4% in the third quarter, this is the strongest increase since 1993!
Finally, while the appointments of the future Trump government continue, that of Scott Bessent - founder of the hedge fund Key Square after having worked with George Soros - as Secretary of the Treasury was rather well received by the financial markets as evidenced by the drop in 10-year US interest rates. Beyond being more consensual than the other appointments, Scott Bessent has repeatedly expressed his concern about the slippage in the trajectory of the American debt, which he intends to reduce by controlling spending and increasing tax revenues through more growth, particularly through deregulation. Enough to further accentuate the gap with Europe...
