Forex News – Eurozone PMIs disappoint but still point to continued growth
February 20, 2014 2:28 pm
Eurozone flash Purchasing Manager Indices (PMIs) for February gave mixed signals regarding the region’s economic performance. The indices were worse than expected, both with respect to services as well as manufacturing. Manufacturing output actually dropped to 53 in February from January’s 54, whereas services actually managed to rise slightly to 51.7 from 51.6. Economists had expected the services sub-index to rise even more to 51.9.
The composite index came in at 52.7 compared to expectations of 53.1 and a previous figure of 52.9. It should be stressed that despite the miss in expectations or the drop in one of the indices, both the services and the manufacturing output components remain above 50, which signifies they are expanding. It was the eighth consecutive month of the PMI above 50, which shows continued economic expansion albeit at a slow pace.
According to Markit’s Chief Economist, the quarterly growth rate in the Eurozone could reach 0.5% during the first quarter of 2014, against economists’ expectations of 0.3% growth.
Although for the Eurozone as a whole – and especially the periphery- the news was not too dire, with respect to France the miss in expectations and the drop from the previous month’s readings was more substantial. French manufacturing PMI fell to 48.5 from 49.3 the previous month, whereas the French services index dropped more substantially to 46.9 from 48.9 the previous month. Therefore, although the message from Germany as well as the periphery was that the economic recovery is on course, France could face problems posting positive growth this quarter, according to Markit, the compilers of the survey.
In the sub-indices of the report, output prices continued to be in negative territory although they edged up closer to the expansion-contraction line of 50 by rising slightly to 49.4 from 49.2. The employment component on the other hand was stable to marginally positive, which means that at least unemployment shouldn’t rise any further.
In the aftermath of the reports the euro dropped from the 1.3740 level to around 1.3690 before bouncing back above 1.37. The euro fell as the reports showed that the Eurozone economic recovery- although alive- was uneven and was unlikely to accelerate. The market is also focused on inflation figures out of the Eurozone, since there is a worry about possible disinflation in the region that could prompt the ECB to take additional action.
Eurozone flash Purchasing Manager Indices (PMIs) for February gave mixed signals regarding the region’s economic performance. The indices were worse than expected, both with respect to services as well as manufacturing. Manufacturing output actually dropped to 53 in February from January’s 54, whereas services actually managed to rise slightly to 51.7 from 51.6. Economists had expected the services sub-index to rise even more to 51.9.
The composite index came in at 52.7 compared to expectations of 53.1 and a previous figure of 52.9. It should be stressed that despite the miss in expectations or the drop in one of the indices, both the services and the manufacturing output components remain above 50, which signifies they are expanding. It was the eighth consecutive month of the PMI above 50, which shows continued economic expansion albeit at a slow pace.
According to Markit’s Chief Economist, the quarterly growth rate in the Eurozone could reach 0.5% during the first quarter of 2014, against economists’ expectations of 0.3% growth.
Although for the Eurozone as a whole – and especially the periphery- the news was not too dire, with respect to France the miss in expectations and the drop from the previous month’s readings was more substantial. French manufacturing PMI fell to 48.5 from 49.3 the previous month, whereas the French services index dropped more substantially to 46.9 from 48.9 the previous month. Therefore, although the message from Germany as well as the periphery was that the economic recovery is on course, France could face problems posting positive growth this quarter, according to Markit, the compilers of the survey.
In the sub-indices of the report, output prices continued to be in negative territory although they edged up closer to the expansion-contraction line of 50 by rising slightly to 49.4 from 49.2. The employment component on the other hand was stable to marginally positive, which means that at least unemployment shouldn’t rise any further.
In the aftermath of the reports the euro dropped from the 1.3740 level to around 1.3690 before bouncing back above 1.37. The euro fell as the reports showed that the Eurozone economic recovery- although alive- was uneven and was unlikely to accelerate. The market is also focused on inflation figures out of the Eurozone, since there is a worry about possible disinflation in the region that could prompt the ECB to take additional action.
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