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Author Topic: Euro area PMIs to stabilize  (Read 420 times)
yellowpage09
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April 20, 2015, 07:05:22 AM
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It is puzzling to see that: 1) the improvement in Euro area PMIs observed since last autumn mostly stems from the services sector rather than from the manufacturing sector and 2) the increase in the manufacturing PMIs comes mostly from domestic demand rather than export growth.

The manufacturing index prints at a lower level than in spring 2014 (53.2), before the fall in the euro and oil prices, and much below the level observed at the turn of the year 2011 (56-57), when the contribution of net exports to GDP growth was important (1.0pp of GDP in 2011).

The expected improvement in April manufacturing PMI would reflect higher export orders, whereas the improvement in domestic demand will start easing in Q2, thus weighing on services PMI. Household consumption has been highly supportive for services activities, but corporate spending takes time to take over.

According to Societe Generale, the euro area manufacturing PMI to stay constant at 52.2 in April. In addition, the PMI for the services sector should decrease from 54.2 to 54.0 in April. Historically, such PMI levels (both for the manufacturing and services sector) have been consistent with GDP growth close to 0.4-0.5% (1.6-1.9% yoy) in Q2 15, which corroborates the forecast of 0.4% in Q2 2015. They expect PMIs to hover around current levels in the coming months.

"Looking at the regional breakdown, the German PMI for the manufacturing sector should soften from 52.8 to 52.7, while the PMI for the services sector should fall from 55.4 to 54.9. Turning to France, the French manufacturing PMI is expected to increase from 48.8 to 49.5, while the services PMI is predicted to decrease from 52.4 to 52.2", notes Societe Generale.

(Source: http://fxwire.pro/Euro-area-PMIs-to-stabilize-26978)
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Miracal
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April 20, 2015, 07:45:16 AM
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I think these data just does't have much impact on the price of EURO. Ppl are more concern on the Greece's problem. The Euro may continue to drop down.
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April 20, 2015, 09:25:40 AM
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PMI is just a sentiment index, and is of no use in a crisis scenario.
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April 20, 2015, 02:07:59 PM
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It's just a measure of how well the manufacturing sector is doing. Despite how well the economy is performing, it has not addressed the main core issue here about Greece problem and the prospect of another bailout taking place. Until this is cleared up, traders will continue to short sell and dump the currency which in turns ended up indirectly slowing down the process of recovery.

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