European Services PMI Surprises
- French, German, Italian, Spanish, and EU Services PMI released
- German Factory Orders month over month
- European Union Retail Sales released
- Signs of optimism
The Wednesday session did not have a lot of huge numbers or economic announcements pushing markets around but what we did get was a slew of Services PMI figures out of the European Union. As Europe has recently been rather weak, it’s interesting to see that these numbers did in fact come in a little better than anticipated. We are starting to see signs of stability in the European Union, and as the Purchasing Managers Index suggests, business leaders are starting to see signs for optimism.
The numbers versus anticipated
The numbers were better than anticipated the most part, with the lone exception being Spanish Services PMI coming in at 52.7 versus the expected 52.8 for the month. The Italian Services PMI figure came in at 52.2, as opposed to an expected 51. The French came in at 59.9, as expected, while the Germans came in at 51.6, better than the anticipated 51.2 for the month. Not to be outdone, the European Union Final Services PMI figure was 52.2, above the expected 51.8 for the month. In general, these are signs of optimism from purchasing managers.
During Factory Orders came in at 1.3% month over month, much higher than the anticipated 0.1%. This is probably one of the more important numbers during the day as the European Union is heavily reliant on Germany, and Germany is heavily reliant on exports. Furthermore, last month’s figures were revised upward from -0.6% to -0.4%, a significant revision.
Finally, European Union Retail Sales month over month came in at 0.1%, as expected. However, the previous month was revised upward from 0.3% to a much stronger 0.6%, offering even more optimism. All things being equal, it does look as if the European Union is starting to wake up slightly, although from extraordinarily low levels.
Long, slow process
As the European Union had suffered quite drastic slow downs economically, it’s a long and drawn out process going forward. One of the biggest concerns that the European Union has now is the banking sector, which attracts a lot of attention from the trading public.
However, the numbers that came out during the day on Wednesday certainly were encouraging and certainly will not hurt the case for the European Union to recover slightly.
Another major issue is Brexit, which seemingly is never going to end. As long as there are a lot of uncertainties involving that crucial factor, the EU will be treated a bit skeptically. However the possibility of a turnaround is starting to show itself, something that will be worth paying attention to for the longer-term. Currency wise, the ECB is going to become ultra-loose with its monetary policy going forward with Christine Lagarde leading the way, so cheaper exports could continue to help Germany, and by extension help the rest of the continent.