Eurozone: Weak signal from economic releases - ANZ

Following the weaker French and German flash PMI data for July, the EA composite index fell to 55.8, which is the lowest reading in six months and whilst still elevated, all subcomponents slipped marginally (i.e. new orders 55.5 v 56.0, employment 54.3 vs 54.4, and future output 65.4 v 67.0), noes he analysis team at ANZ.

Key Quotes

“The fall entirely reflected a decline in the manufacturing components to 56.8 as the services index was unchanged at 55.4. While the survey’s price indices also edged down, this seems unlikely to deter the ECB from tapering its asset purchases next year. The ECB is watching financial conditions and whilst they are still very accommodative, it will have an eye on the momentum in the exchange rate, which was checked overnight by this softer result.”

“In contrast, the US Markit flash July PMI was a touch stronger at 54.2 vs an upwardly revised 53.9 in June. The manufacturing component rose (53.2 v 52.0), whilst services were unchanged at 54.0. For the composite index, employment rose to 54.0 vs 52.8, new orders rose to 56.0 vs 54.9 and the backlog of orders was at 50.6 vs 50.4. It’s a decent report for the start of the third quarter and shows some positive divergence vs the euro area. June existing home sales fell 1.8% to 5.52m saar.”