Service Sector and Composite PMIs Deliver EUR Support in Spite of Service Sector Woes

It was another busy Eurozone economic calendar this morning. Member state and Eurozone service sector and composite PMIs were in focus.

Member States

For Spain, the services PMI fell from 59.8 to 55.8 versus a forecasted 57.5.

Service sector activity in Italy also saw slower growth, with the PMI down from 55.9 to 53.0. Economists had forecast a fall to 54.0.

For France, the services PMI fell from 57.4 to 57.0, which was down from a prelim 57.1. Germany’s services PMI declined from 52.7 to 48.7, which was up from a prelim 48.4.

The Eurozone

For the Eurozone, the services PMI fell from 55.9 to 53.1, which was down from a prelim 53.3.

As a result, the Composite PMI slipped from 55.4 to 53.3, which was down from a prelim 53.4.

According to the December survey,

• Economic growth eased to a 9-month low in December.
• Rising COVID-19 cases had a more marked impact on service sector activity.
• At the end of the year, supply-related disruptions continued to impact production schedules.
• In spite of supply chain issues, the manufacturing sector outpaced the services sector for the 1^st time since July.
• Composite output PMIs by country all declined during December.
• Slower rates of growth were seen in Ireland, France, Spain, and Italy.
• Demand for goods and services across the Eurozone rose at the slowest pace since March.
• More significantly, demand from international clients rose at the slowest pace since January.
• By contrast, business optimism improved marginally in December, coinciding with a pickup in the pace of hiring.
• On the inflation front, output charges and input costs increased at the second-sharpest rates on record.

By Country

• Ireland ranked 1^st, with a 9-month low composite PMI of 56.5.
• France came in 2^nd, with a 2-month low 55.8, followed by Spain, with an 8-month low 55.4.
• German sat behind Italy at the bottom of the table with an 18-month low 49.9.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.12771 before rising to a pre-stat high $1.13079.

In response today’s stats, the EUR fell to a post-stat low $1.12968 before rising to a post-stat and current day high $1.13111.

At the time of writing, the EUR was up by 0.15% to $1.13044.

Next Up

ADP Nonfarm employment change and finalized services and composite PMIs from the U.S.