While the Sovereign Crisis remains in the spotlight, this week’s PMI’s gave a timely reminder of where growth it likely to head over the coming months. The composite PMI suggests the growth for the 4th quarter is likely to be negative:
But various pundits, including recently the RBA’s John Edwards, have mused that the recession is likely to be mild. If we overlay what the approximate negative read implies for the annual pace of growth compared to the ZEW survey which measures the expectations of future economic growth 6 months into the future (it represents the difference between positive and negative responses of about 350 institutional investors and analysts) we get a read on the likely result:
The word “mild” is not the one that springs to mind.