Manufacturing Sector PMI Figures Impress, Delivering a EUR Boost

It’s a particularly busy day on the Eurozone economic calendar today. Private sector PMI numbers for France and Germany were in focus ahead of the Eurozone’s prelim PMI numbers.

France

According to the prelim survey, the French Manufacturing PMI jumped from 51.6 to a 3-year high 55.0 in February. Economists had forecast a decline to 51.4.

The services PMI fell from 47.3 to a 3-month low 43.6, which was worse than a forecasted decline to 47.0.

In spite of the jump in manufacturing sector activity, the French Composite PMI fell from 47.7 to a 3-month low 45.2.

According to the Markit survey,

• COVID-19 restrictions continued to weigh on the private sector, with output in decline for a 6^th consecutive month.
• With output in decline, new orders were also in decline, with the pace of reduction accelerating to the quickest in 3-months.
• In the services sector, the prolonged closure of business left the PMI at a 3-month low.
• A marked slide in demand across the services sector more than offset the fastest increase in new orders for two-and-a-half years across the manufacturing sector.
• Domestic demand weighed, while new export orders rose for the first time since Dec-19. This was in spite of a sharp decline overseas new business orders in the services sector.
• Private sector firms increased staff numbers, delivering the first back-to-back monthly rise since Feb-20.
• Firms were also optimistic, with the degree of optimism the strongest in just over 30-months.

Germany

Manufacturing sector activity picked up in February, with the prelim Manufacturing PMI rising from 57.1 to a 36-month high 60.6. Economists had forecasted a fall to 56.5.

Service sector troubles continued, however, with the services PMI falling from 46.7 to a 9-month low 45.9. Economists had forecast a decline to 46.5.

As a result of the jump in manufacturing sector PMI, the composite PMI increased from 50.8 to a 2-month high 51.3.

According to the prelim survey,

• While COVID-19 restrictions continued to weigh on the services sector, strong overseas demand drove manufacturing sector output.
• Inflows across the service sector fell for a 5^th consecutive month and at the quickest pace in this sequence.
• For the manufacturing sector, factory export orders saw its most marked rise in over 3-years.
• Across the private sector, there was a modest increase in staff numbers, marking a 3^rd increase in 4-months.
• In spite of service sector woes, the services sector remained the strongest performer on the jobs front.
• Across the manufacturing sector, employment came closer to stabilizing after falling in each month throughout the past 2-years.
• Optimism across the private sector reached the highest since Dec-17.

Market Impact

Ahead of the key stats of the day, the EUR had struck a pre-release high $1.21142, having recovered from an early low $1.20823.

Through the release of the PMIs, the EUR rose from $1.21099 to a current day high $1.21311 before easing back.

At the time of writing, the EUR was up by 0.31% to $1.21262.

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