It was a busy start to the European session this morning, with manufacturing sector PMIs for Spain and Italy in focus. However, finalized PMIs for France, Germany, and the Eurozone also drew attention.
Member State Manufacturing Sector PMIs
In December, Spain’s manufacturing PMI rose from 45.7 to 46.4, with Italy’s PMI up from 48.4 to 48.5. Economists had forecast PMIs of 46.2 and 48.5, respectively.
The French manufacturing PMI rose from 48.3 to 49.2, an upward revision from a prelim of 48.9. Germany’s PMI increased from 46.3 to 47.1, down from a prelim 47.4.
Eurozone PMI Reflects Modest Improvement in Manufacturing Sector Activity
For the Eurozone, the manufacturing PMI rose from 47.1 to a 3-month high of 47.8, which was in line with a prelim 47.8.
According to the December Survey,
- Softening inflationary pressures and improving supply chain conditions eased pressure on manufacturers.
- Weakness in client demand persisted, however, with new orders continuing to slide. The fall in factory order sales was the weakest in four months, with a softer fall in new export orders positive.
- Despite weak orders, firms increased pre-and post-production inventories, with employment growth continuing, though the pace of hiring slowed to a 22-month low.
- While optimism improved, the sector contracted for a seventh consecutive month, albeit at the weakest pace since June.
- Importantly, inflationary pressures eased in December, though the rate of input cost inflation remained elevated. Softer inflationary pressures allowed firms to raise output charges at a slower pace.
- The increase in output charges was the least marked since March 2021.
By member state, France ranked at the top of the table, while Germany and Spain sat at the bottom of the table, below Greece.
Market Impact
Ahead of today’s stats and bulletin, the EUR fell from a current-day high of $1.06994 to a pre-stat low of $1.06228.
In response to today’s figures, the EUR/USD rose to a post-stat high of $1.06970 before easing back.
At the time of writing, the EUR was down by 0.14% to $1.06845.
Next Up
There are no other economic indicators for investors to consider today. The UK and US markets are closed today. However, any FOMC member chatter would draw interest.
