Eurozone PMIs: up, up and away!

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The Markit Flash PMIs for manufacturing and services based on approximately 85% of usual monthly responses were released today. The manufacturing PMI for February hit the highest level since June 2000 at 59.0 compared to 57.3 in January. The services PMI came in at 57.2 compared to 55.9 in January – the highest since August 2007. Germany and France, the two major economies in the Eurozone, continue to lead the way but according to Markit the pace also picked up outside of the big two – in such a way that they are falling just short of the highs seen in March and April last year.

Sources: Markit.

If I look at my GDP-weighted for the Eurozone it seems to me that GDP growth in the second quarter of this year may accelerate to around 2.5%+ on a year-ago basis.

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

The Markit surveys report that prices charged for goods and services rose at the fastest rate since July 2008, while the prices of manufacturers’ output reached a record rise. Input prices too jumped higher to reach the highest levels since July 2008.

Given what is happening on the economic growth front, together with the surge in prices, the ECB must surely be itching to hike the repo rate!

Meanwhile Fed manufacturing surveys in the main districts indicate further strength in the U.S. manufacturing sector.

ISM Manufacturing PMIPhiladelphia Fed Survey GBINY Empire State Manufacturing Survey GAIRichmond Manufacturing Survey CompositeAverage of Surveys
Dec-1057.020.89.92518.6
Jan-1160.819.311.91816.4
Feb-1135.915.42525.4

Sources: New York Fed; Philadelphia Fed; Richmond Fed; Plexus Asset Management

I will not be surprised if February’s ISM manufacturing PMI will come in higher or at least maintain January’s already robust 60.8. February’s number is due Tuesday next week (1 March).

Sources: New York Fed; Philadelphia Fed; Richmond Fed; Plexus Asset Management.

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