The most recent data from the Purchasing Managers’ Index, which is compiled by Markit, was released earlier today, and it demonstrated the continuation of a concerning trend of muted growth in the Eurozone.
“Flash PMI data for January indicated that the eurozone economy failed to pick up growth momentum at the start of 2020. Business activity increased at the same slight pace as was seen in the final month of 2019 as the rate of expansion in new orders remained muted.”
The Flash Eurozone PMI Composite Output Index remained unchanged from December at 50.0 index points. Thus, 2020 starts with virtually no changes from the preceding year and the same downbeat outlook for the near future growth prospects.
Eurozone Composite PMI. Image source: TradingEconomics.com
The services PMI has recorded a slight deterioration by reaching a 2-month low. This is arguably the most concerning data given that Christine Lagarde had previously stated that the services sector is one of the most important parts of the European economy.
On the other hand, welcoming news is the observed positive development in manufacturing. The Flash Manufacturing PMI Output Index is currently at 47.5 index points, which marks a 5-month high.
The observed improvement in industrial manufacturing is owing to the stabilization of international trade relationships and the shifting of global risks to the downside.
As the overall uncertainty continues to diminish, manufacturing will continue to be bolstered as investors and business will have more incentives to continue financing the economic activity.
The improvement in manufacturing had a momentary positive impact on European stocks as the Euronext 100 index corrected yesterday's losses caused by Donald Trump’s comments at Davos, and opened today’s trading session with 1.18 per cent gains.
The index is currently struggling to break out above the short-term resistance at 1162.00.
Euronext 100 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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