European Figures Disappoint on the Whole

Alan Penny

22 November 2019

3 min read

European Central Bank

  • French flash services PMI
  • German flash manufacturing PMI
  • German flash services PMI
  • EU flash manufacturing PMI

The European Union released several economic announcements during the trading session on Friday that showed less than ideal economic conditions. Because of this, the euro will probably continue to be on its back foot longer-term, which should drive money into the US dollar as it is the “anti-euro”.

There is still plenty of uncertainty out there to worry about right now. This will do nothing to help risk appetite as the European Union continues to struggle from a longer-term standpoint.

The numbers

During the session on Friday, the French Flash Services PMI figure came out at 52.9, as opposed to the anticipated 53. After that, the German Flash Manufacturing PMI figures came out at 43.8, which was better than the 42.9 anticipated by the market.

The European Union Flash Manufacturing PMI figures came out at 46.6, as opposed to the market’s anticipated 46.4. The Flash Services PMI came in at 51.5, which was below the anticipated 52.4.

The numbers show that the European Union still is very uneven as far as growth is concerned, and on the whole, this is a bit disappointing. Many of the revisions were slightly lowered from the previous month, which is not helping the situation.

Although the United Kingdom is leaving the European Union, the numbers for the day also missed, showing that the general economic malaise in this region of the world continues.

The main takeaway

The main takeaway of these announcements is that the European Union continues to be very uneven in its growth, with Germany leading the way. This is without a doubt the anticipated highlight of the European Union, as the German economic engine is the biggest part of growth under normal circumstances.

While Germany itself looks like it’s coming out of the slump a little, the European Union seems like it can’t get out of its own way. Peripheral countries continue to drag, and even France is struggling.

The market has favored the United States for a few years, and it looks as if that will continue to be the case

In this environment, it should continue to favor the run towards the United States by investors. That’s because the European Union simply doesn’t offer much in the way of returns.

That’s not to mention that, during the trading session, Weidmann of the European Central Bank stated that monetary policy accommodation is still warranted at this juncture. In other words, there’s more quantitative easing, so that should continue to weigh on the currency and confidence in the region.

While the United States isn’t overtly strong, it is growing something that the European Union seems to be struggling to do these days, as are many other parts of the world.

The market has favored the United States for a few years, and it looks as if that will continue to be the case. This should have money flowing into the stock market in New York as well as the greenback overall.

Written By
Alan Penny

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