Service sector

Services Sector and Composite PMIs Offer Euro Support Despite Difficulties in Services Sector

It was another busy economic calendar for the eurozone this morning. The focus of attention was on the Member States and euro area services sector and composite PMIs.

Member States

For Spain, the services PMI fell from 59.8 to 55.8 against a forecast of 57.5.

Activity in the service sector in Italy also grew more slowly, with the PMI falling from 55.9 to 53.0. Economists were forecasting a drop to 54.0.

For France, the services PMI index went from 57.4 to 57.0, against preliminary 57.1. The German services PMI index fell from 52.7 to 48.7, against 48.4 previously.

The euro zone

For the euro zone, the services PMI index fell from 55.9 to 53.1, against preliminary 53.3.

As a result, the composite PMI index slipped from 55.4 to 53.3, against preliminary 53.4.

According to the December survey,

  • Economic growth fell to its lowest level in nine months in December.
  • The increase in COVID-19 cases has had a more marked impact on the activity of the service sector.
  • At the end of the year, supply disruptions continued to impact production schedules.
  • Despite supply chain issues, the manufacturing sector overtook the service sector for 1st time since July.
  • The composite PMI production indices by country all fell in December.
  • Slower growth rates were observed in Ireland, France, Spain and Italy.
  • Demand for goods and services in the euro area grew at the slowest pace since March.
  • More importantly, demand from international customers grew at the slowest pace since January.
  • In contrast, business optimism improved slightly in December, coinciding with an acceleration in the pace of hiring.
  • On the inflation front, production costs and input costs increased at the second highest rate on record.

By country

  • Ireland ranked 1st, with a low 9-month composite PMI of 56.5.
  • France has arrived 2sd, with a 2-month low at 55.8, followed by Spain, with an 8-month low at 55.4.
  • Germany sat behind Italy at the bottom of the table with an 18-month low at 49.9.

Market impact

Prior to today’s stats, the EUR had fallen to a pre-stat and current low of $ 1.12771 before climbing back to a pre-stat high of $ 1.13079.

In response to today’s stats, the EUR fell to a post-stat low of $ 1.12968 before climbing back to a current and post-stat high of $ 1.13111.

At the time of this writing, the Euro was up 0.15% to $ 1.13044.

Following

ADP Non-Farm Job Change and Finalized Services and US Composite PMIs