Forex: EUR/GBP: Eurozone recovery continues with plus-50 Services PMI

on Jan 6, 2014
Updated: Oct 21, 2019
Listen Monday, January 6th:_ The Markit Eurozone Final Services Purchasing Managers Index (PMI) for December checked in today at the preliminary 51.0, versus 51.2 in November. And at 52.1, the Eurozone Final Composite Output Index also remained unchanged from the flash estimate, after November’s.

Values above 50 indicate industry expansion and Markit chief economist Chris Williamson comments in the accompanying report that “the PMI surveys indicate that the Eurozone recovery gained further traction at the end of last year”. He adds that “December saw the second-largest increase in business activity since June 2011 and rounded off the best quarter for two-and-a-half years”.

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The Final German Services PMI came out at 53.5 points in December, down on the flash estimate of 54.0 and 55.7 in November to hit a two-month low. The Final Composite Output Index came out at 55.0 in December, down from 55.4 in November also falling to a two-month low.
Markit senior economist Tim Moore writes that “Germany’s private sector finished 2013 with a further strong expansion of business activity, despite service providers indicating a moderation in growth from the near two-and-a-half year peak seen during November”.

Moore observes that “the improving underlying business climate in Germany led to a rebound in job creation during December, with manufacturing employment returning to growth while service sector companies added to their workforce numbers at the fastest rate for two years”.
At 47.8, the French Final Services PMI for December retreated from November’s 48 to hit a six-month low. The Composite Output Index’s fall to 47.3 points in December from 48.0 in November established a seven-month low.

Jack Kennedy comments for Markit on the French reading that “persistently weak demand continues to impact on the sector’s performance, with firms reporting continued declines in both new business and backlogs of work”. But there’s light in the tunnel according to Kennedy, in that “firms hold some positivity that the situation will improve in 2014, with business expectations holding at a level better those seen over much of the past year-and-a-half”.

The Spanish Services PMI increased to 54.2 points in December from 51.5 in November – the sharpest rise in activity since July 2007 and leading Markit’s Andrew Harker to observe that “the latest services PMI data provide real optimism that in 2014 we could finally see the start of a meaningful economic recovery in Spain”. Harker adds that “there even look to be signs of positive movement in the labour market, with the sector coming close to seeing a stabilisation in employment in December”.
Meanwhile, the Sentix Eurozone Investor Confidence jumped to 11.9 this month from 8.0 in December, reaching its highest point since April 2011. Analysts had expected a rise to 9.5 points.

And in the UK, the Markit/CIPS Services PMI fell to 58.8 in December from 60.0 in November, hitting a six-month low.
Markit’s chief economist Chris Williamson says of the UK reading that “more strong growth looks likely as we move into 2014. Optimism about the year ahead hit the highest since early-2010 and growth of new orders remains reassuringly robust across all three sectors”.
Markit sees it as “perhaps inevitable … that we may see the rate of growth slow compared with the unusually strong pace seen in recent months”. The weakest sectors are seen as personal services, restaurants and hotels.
Later today, the German statistics agency Destatis is due to announce the country’s preliminary Consumer Price Index for December. The consensus is for a 0.3 percent rise from November and 1.4 percent increase year-on-year.
Currently the EUR/GBP is changing hands at 0.8315, after earlier reaching an intraday high at 0.8330, for an intraday gain of 0.30 percent. Strong support has been offered since 3 November the 50 percent Fibonacci retracement of 0.7750 to 0.8814 at 0.8282.
Resistances today: 0.8300, 0.8320 and 0.8330.
Supports: 0.8290, 0.8270 and 0.8250.


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