October was a pretty good month, all things considered, for economic data out of Europe. Industrial production out of Germany, Italy, France and for the Euro-Area aggregate all surprised to the upside. Trade data out of Germany and France was also more positive than most pundits were expecting. All in all, third quarter GDP looks like it accelerated in the last month of the quarter and the outlook for fourth quarter GDP is continuing that trend as well. Cyclical stocks out of Europe seem to have predicted this cyclical improvement in economic data as these stocks have bounced backed since July. On an equal-weighted, USD basis, cyclical stocks have outperformed the MSCI World Index by roughly 9% since the middle of July. And with the latest manufacturing PMI release for the Euro Zone clocking in at a multi-year high of 53.90, it seems that European cyclical stocks could have further to gain.
