Yesterday’s Eurozone PMI data were simply awful. The German manufacturing PMI in particular was a shocker, with the index falling to a 10-year low of 41.4. That doesn’t bode well for this morning’s German Ifo Survey, which is highly likely to print below consensus expectations of a marginal improvement. In the second quarter German GDP contracted by 0.1%. The current constellation of survey data point to a second straight quarter of negative quarterly GDP growth – a technical recession. But if recent Ifo data is any guide, German GDP will soon show year-on-year declines as well. Here are implied year-on-year GDP growth rates according to a regression of monthly Ifo data:

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