Service sector

Services Sector and Composite PMIs Offer EUR Support Despite Service Sector Struggles

It was another busy economic calendar for the Eurozone this morning. The Member State and Eurozone services sector and composite PMIs were in focus.

Member States

For Spain, the services PMI fell from 59.8 to 55.8 vs. 57.5 forecast.

Service sector activity in Italy also saw a slowdown in growth, with the PMI index falling from 55.9 to 53.0. Economists had forecast a drop to 54.0.

For France, the services PMI fell from 57.4 to 57.0, compared to 57.1 at the start. The German services PMI rose to 48.7 from 52.7, down from 48.4 at the start.

The euro zone

For the euro zone, the PMI services index fell from 55.9 to 53.1, against 53.3 at the start.

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

According to December poll,

  • Economic growth hit a 9-month low in December.
  • The increase in COVID-19 cases has had a greater impact on service sector activity.
  • At the end of the year, supply disruptions continued to impact production schedules.
  • Despite supply chain issues, the manufacturing sector has overtaken the service sector for the 1st time since July.
  • The composite PMIs for production by country all fell in December.
  • Slower growth rates were observed in Ireland, France, Spain and Italy.
  • Demand for goods and services in the eurozone grew at the slowest pace since March.
  • More importantly, demand from international customers grew at the slowest pace since January.
  • On the other hand, business optimism improved slightly in December, coinciding with an acceleration in the pace of hiring.
  • On the inflation front, production costs and input costs rose at the second highest rate on record.

By country

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

Market Impact

Prior to today’s data, the Euro fell to a pre-statistic and current low of $1.12771 before rising to a pre-statistic high of $1.13079.

In response to today’s data, the Euro fell to a post-statistical low of $1.12968 before rising to a post-statistical and current high of $1.13111.

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

Following

ADP Nonfarm Employment Change and Finalized Services and U.S. Composite PMIs