Allan von Mehren
Danske Bank A/S
The euro flash PMI was a bit of a mixed bag but overall still shows a declining trend in euro area growth.
The composite new orders index fell from 51.4 to 50.6, the weakest level since July last year and points to growth only slightly above zero. Both manufacturing and service orders declined, although service is still holding up fairly well.
Of some concern is a sharp deterioration in the order-inventory balance within euro manufacturing as the inventory index rose quite a lot to the highest level since 2008. It points to further weakness in manufacturing in the coming months as companies need to work off too high inventory levels.
There were a few small bright spots in the German flash PMI for the manufacturing sector as the overall PMI rose from 49.5 to 51.8. The new orders index also rose from 48.8 to 50.1. But it came after a big drop last month and overall the trend still seems to be down. The German service PMI incoming business fell for the second month in a row but the level is still decent.
In France, the flash PMI was not very uplifting. Service incoming business fell to the lowest level since August last year and manufacturing new orders slipped back again after showing a surprise rise last month.
Overall the PMI report continues to show downward momentum in euro area activity and a decline in the order-inventory ratio suggests this could continue in the short term. Looking into next year, we expect some improvement during Q1 as consumer demand is still decent and companies benefit from a weaker euro and robust growth in the US. Thawing of bank lending as we get past the bank stress tests and ECB ABS purchases frees up space in banks’ balance sheets.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.