German Preliminary Services PMI beats estimates with 46.8 in Jan, EUR/USD bounces

  • German Manufacturing PMI arrives at 57.0 in Dec vs. 57.5 expected.
  • Services PMI in Germany improves to 46.8 in Dec vs. 45.3 expected.
  • EUR/USD bounces from 1.2150 on mixed German PMIs.

The German manufacturing sector expanded less-than-expected in January, the preliminary manufacturing activity report from IHS/Markit research showed this Friday.

Meanwhile, Services PMI contracted to 46.8 in January as against the previous month’s reading of 47.0 and 45.3 anticipated. The index hit a two-month low.

The IHS Markit Flash Germany Composite Output Index dropped to seven-month lows of 50.8 in January vs. 50.3 expected and 52.0 previous.

Key comments from Phil Smith, Principal Economist at IHS Markit

“There were few surprises from January’s flash Germany PMI release, with the manufacturing data remaining strong but showing a slight loss of momentum, while services activity was further depressed by the lockdown measures introduced in the middle of December.”

“All in all, the German economy has made a slow start to the year, and the extension of the current containment measures until at least mid-February means this looks like being the picture for several more weeks to come.”

FX implications

EUR/USD jumps nearly 20-pips to near 1.2180 region after the German Services PMI surpassed expectations.

Meanwhile, the German government expects 2021 GDP growth at a lower rate than the previous forecast of 4.4%, Reuters reports, citing a government source.

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