Eurozone and Eurozone Member State Service PMIs Fails to Deliver a EUR Boost

It was a busier start to the day on the economic calendar today. Following some impressive manufacturing PMI numbers last week, the services sector was in the spotlight this morning.

Service Sector PMIs for March

Service sector PMI figures for Italy and Spain were in focus in the early part of the European session.

Finalized PMI numbers for France, Germany, and the Eurozone were also due out.

In March, Spain’s services PMI increased from 43.1 to 48.1. Economists had forecast a rise to 46.0.

Italy’s services PMI slipped from 48.8 to 48.6, however, falling short of a forecasted 49.0. For Italy’s services sector, business activity fell once more, with new work also declining. As a result, firms reduced headcount at the end of the quarter.

For France, the services PMI increased from 45.6 to 48.2. This was up from a prelim 47.8. The sector contracted at the slowest pace in 3-months, with the rate of new business also falling at the slowest pace in 3-months. Job creation rose at its strongest since before the pandemic.

Germany’s services PMI rose from 45.7 to 51.5. This was up from a prelim 50.8. The upward revision led to an upward revision of Germany’s composite from 56.8 to 57.3. In February, Germany’s composite had stood at 51.1.

An easing of lockdown measures helped lift service sector activity. The pace of hiring also increased at a faster pace in spite of rising cost pressures. Optimism jumped to its highest level since March 2018, supported by hopes of an effective COVID-19 vaccine program.

Eurozone Private Sector Activity

In March, the Eurozone’s services PMI increased from 45.7 to 49.6. This was up from a prelim 48.8.

A jump in manufacturing sector activity and a slower contraction in service sector activity led to a rise in the composite PMI.

The composite PMI increased from 48.8 to 53.2 in March, which was up from a prelim 52.5.

According to the finalized Markit survey,

• Driven by a record increase in manufacturing output, the Eurozone’s private sector economy returned to growth in March.
• The Composite Output Index rose to its highest level since last July.
• Service sector output fell at its slowest pace in the current 7-month sequence of contraction.
• An increase in new orders supported the pickup in overall private sector activity.
• Overall, new sales rose at its sharpest degree in two-and-a-half years, driven by both domestic and overseas demand.
• New export business increased at the strongest pace in over six-and-a-half years.
• As a result of increased demand, backlogs of unfinished business rose for the first time since November 2018.
• The pace of hiring rose at the most marked pace since June 2019, with both sectors hiring.
• Business confidence improved to a 37-month peak at the end of the quarter.

Market Impact

Ahead of the PMI numbers, the EUR had struck to a pre-release high and current day high $1.18821

In response to today’s data released, the EUR slipped to a post-stat low $1.18652 before rising to a post-stat high $1.18819. The recovery was short-lived, however.

At the time of writing, the EUR was down by 0.01% to $1.18741.

Following record gains on Tuesday, the European futures had pointed to further upside ahead of the open this morning.

The DAX30 had been up 16 points, with the CAC40 up 11 points ahead of the PMI numbers.

Up Next

U.S trade data, with the FOMC meeting minutes due out after the European close.

Don’t expect the trade figures to have too much influence on the EUR or the European boerses, however.