Eurozone flash Manufacturing PMI remains steady at 52.7 in September

Sagar Dua FXStreet

Preliminary HCOB Manufacturing Purchasing Managers’ Index (PMI) in the Eurozone remains steady at 52.7 in September, while it was expected to drop to 52.6. The Composite PMI unexpectedly rises to 53.1 from 52.0 in August. Economists expected the overall business activity to have come in lower at 51.5. The Services PMI jumps at a faster-than-expected pace to 53.0 from estimates of 51.7 and the previous release of 51.6.

“It’s no surprise to see inflationary pressures on the rise again in September, given the increase in energy prices emanating from the ongoing conflict in the Middle East, but more encouraging is the resilience of economic growth being reported. Accelerating business growth means the flash PMI survey is indicative of GDP rising at a quarterly rate of 0.4%, with order book growth picking up further momentum across both manufacturing and services in September to hint at sustained momentum heading into the fourth quarter," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said.

Regarding the European Central Bank's (ECB) monetary policy outlook, Chris Williamson said, "The resilience of economic growth amid the headwinds of geopolitical issues and rising prices will likely embolden the ECB to hike interest rates again before the end of the year, adding to the case for rates to rise sooner rather than later to put an October hike very much on the table.”

Market reaction

The Euro (EUR) faces selling pressure against its peers after the German and Eurozone preliminary HCOB PMI data release. At press time, EUR/USD is down 0.3% to near 1.1412.

Economic Indicator

HCOB Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.

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