Latest data released by Markit/BME - 6 January 2020
- Composite PMI 50.9 vs 50.6 prelim
The preliminary report can be found here. The higher revisions here mostly came from the bump in the German reading and that sees the euro stay underpinned with EUR/USD rising to 1.1181 currently.
That said, it just reaffirms the divergence in the manufacturing and services sector in Europe but the good news is that there isn't a risk of a significant spillover from the manufacturing slowdown - even towards the end of last year.
But any major recovery still remains a distance away and will require a noticeable uptick in factory conditions and exports - which is still rather benign at the moment.
Here is Markit's summary of the report:
"Another month of subdued business activity in December rounded off the eurozone's worst quarter since 2013. The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019.
At face value, the weak performance is disappointing given additional stimulus from the ECB, with the drag from the ongoing plight of the manufacturing sector a major concern. However, policymakers will be encouraged by the resilient performance of the more domestically-focused service sector, where growth accelerated in December to its highest since August. Business optimism about the year ahead has also improved to its best since last May, suggesting the mood among business has steadily improved in recent months.
While the tide may be turning, downside risks to growth in the year ahead nevertheless remain notable. While US-China trade wars have eased, any escalation of trade tensions between the US and Europe will likely hit exports further. Brexit also remains a major uncertainty and is likely to continue to dampen growth in Europe. Nonetheless, in the absence of any major adverse developments we expect to see growth starting to improve as 2020 proceeds, with low inflation and easing financial conditions supporting consumer spending in particular."
