Flash Eurozone PMIs: rescued by Germany and France

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The Markit Flash Eurozone PMIs for manufacturing and services, based on around 85% of usual monthly replies, were released yesterday. The manufacturing PMI dropped slightly to 56.9 in January from 57.1 in December, while the services PMI rose to a 2-month high of 55.2 from 54.2 in December.

Growth in the Eurozone is concentrated in France and Germany. Both Germany’s manufacturing and services PMIs continued to register buoyant growth of 60.7 and 60.0 respectively compared to 60.2 and 59.2 in December. The growth in France’s services sector accelerated to 57.1 from 54.9 in December but growth in the manufacturing sector eased to 54.3 from 57.2 previously.

Outside Germany and France new orders fell for the fourth time in the past five months, while employment continues to fall. According to Markit, input prices have risen at the highest rate since August 2008 but output prices have risen at a reduced pace.

With my Eurozone GDP-weighted PMI (manufacturing and services combined) leading the economy by approximately one quarter, the Flash PMIs indicate that GDP growth in the second quarter of this year is running at an unchanged 2% year on year.

Sources: Markit; I-Net; Plexus Asset Management.

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